<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
PRIMEDIA INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
74157K 10 1
--------------------------------
(CUSIP Number)
Charles Y. Tanabe, Esq.
Senior Vice President and General Counsel
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
(720) 875-5400
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 19, 2000
--------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note. Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 15 Pages)
- ----------------
/*/The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP NO. 74157K 10 1
================================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Liberty Media Corporation
84-1288730
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
9,500,000 shares*
NUMBER OF -----------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY -----------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 9,500,000 shares*
PERSON -----------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,500,000 shares*
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 6.0%. See Item 5.
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
================================================================================
*Assuming exercise of warrant to purchase 1,500,000 shares of common stock
beneficially owned by the Reporting Person.
Page 2 of 15
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Statement of
LIBERTY MEDIA CORPORATION
Pursuant to Section 13(d) of the Securities Exchange Act of 1934
in respect of
PRIMEDIA Inc.
Item 1. Security and Issuer.
Liberty Media Corporation, a Delaware corporation ("Liberty" or the
"Reporting Person"), is filing this Statement on Schedule 13D (this "Statement")
with respect to the common stock, par value $.01 per share (the "Common Stock"),
of PRIMEDIA Inc., a Delaware corporation (the "Issuer"). The Issuer's principal
executive offices are located at 745 Fifth Avenue, 23rd Floor, New York, New
York 10151.
Item 2. Identity and Background.
The reporting person is Liberty, whose principal business address is 9197
South Peoria Street, Englewood, Colorado 80112. Liberty Prime, Inc., a Delaware
corporation and a wholly owned subsidiary of Liberty ("Liberty Prime"), is the
registered holder of the shares of Common Stock beneficially owned by Liberty.
Prior to March 9, 1999, Liberty was controlled by Tele-Communications,
Inc., a Delaware corporation ("TCI"). TCI's principal business address is 9197
South Peoria Street, Englewood, Colorado 80112. TCI is principally engaged
through its subsidiaries and affiliates in the acquisition, development and
operation of cable television systems throughout the United States.
As a result of the consummation on March 9, 1999 of the merger (the "AT&T
Merger") of a wholly owned subsidiary of AT&T Corp., a New York corporation
("AT&T"), with and into TCI, (i) TCI became a wholly owned subsidiary of AT&T;
(ii) the businesses and assets of the Liberty Media Group and TCI Ventures Group
of TCI were combined; and (iii) the holders of TCI's Liberty Media Group common
stock and TCI Ventures Group common stock received in exchange for their
Page 3 of 15
<PAGE>
shares a new class of common stock of AT&T intended to reflect the results of
AT&T's "Liberty Media Group." Following the AT&T Merger, AT&T's "Liberty Media
Group" consists of the assets and businesses of TCI's Liberty Media Group and
its TCI Ventures Group prior to the AT&T Merger, except for certain assets that
were transferred to TCI's "TCI Group" in connection with the AT&T Merger, and
the "AT&T Common Stock Group" consists of all of the other assets and businesses
of AT&T. AT&T's principal business address is 32 Avenue of the Americas, New
York, New York 10013. AT&T is principally engaged in the business of providing
voice, data and video communications services to large and small businesses,
consumers and government entities in the United States and internationally.
The board of directors and management of the Reporting Person manage the
business and affairs of the Reporting Person, including, but not limited to,
making determinations regarding the disposition and voting of the Shares.
Although the Reporting Person is a wholly owned subsidiary of AT&T, a majority
of the Reporting Person's board of directors consists of individuals designated
by TCI prior to the AT&T Merger. If these individuals or their designated
successors cease to constitute a majority of the Reporting Person's board of
directors, the Reporting Person will transfer all of its assets and businesses
to a new entity. Although this new entity would be owned substantially by AT&T,
it would continue to be managed (including with respect to the voting and
disposition of the Shares) by management of the Reporting Person prior to such
transfer of assets.
As a result, the Reporting Person, acting through its board of directors
and management, will have the power to determine how the Shares will be voted
and, subject to the limitations of the Delaware General Corporation law, will
have the power to dispose of the Shares, and thus is considered the beneficial
owner of the Shares for purposes of Section 13(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
The Liberty Media Group, principally through the Reporting Person, is
engaged in (i) the production, acquisition and distribution through all
available formats and media of branded entertainment, educational and
informational programming and software, including multimedia products, (ii)
electronic retailing, direct marketing, advertising sales related to programming
services, infomercials and transaction processing, (iii) international cable
television distribution, telephony and programming, (iv) satellite
communications, and (v) investments in wireless domestic telephony and other
technology ventures.
Schedule 1 attached to this Statement contains the following information
concerning each director, executive officer or controlling person of the
Reporting Person: (i) name and residence or business address, (ii) principal
occupation or employment; and (iii) the name, principal business and address of
any corporation or other organization in which such employment is conducted.
Schedule 1 is incorporated herein by reference.
To the knowledge of the Reporting Person, each of the persons named on
Schedule 1 (the "Schedule 1 Persons") is a United States citizen, except for
David J.A. Flowers, who is a Canadian citizen. During the last five years,
neither the Reporting Person nor any of the Schedule 1 Persons (to the knowledge
of the Reporting Person) has been convicted in a criminal proceeding (excluding
Page 4 of 15
<PAGE>
traffic violations or similar misdemeanors). During the last five years,
neither the Reporting Person nor any of the Schedule 1 Persons (to the knowledge
of the Reporting Person) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such
proceeding, is or was subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Schedule 2 attached to this Statement contains the following information,
which has been provided to the Reporting Person by AT&T, concerning each
director, executive officer or controlling person of AT&T: (i) name and
residence or business address, (ii) principal occupation or employment; and
(iii) the name, principal business and address of any corporation or other
organization in which such employment is conducted. Schedule 2 is incorporated
herein by reference.
Based upon information provided to the Reporting Person by AT&T, (i) to the
knowledge of AT&T, each of the persons named on Schedule 2 (the "Schedule 2
Persons") is a United States citizen, (ii) during the last five years, neither
AT&T nor any of the Schedule 2 Persons (to the knowledge of AT&T) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and (iii) during the last five years, neither AT&T nor any of the
Schedule 2 Persons (to the knowledge of AT&T) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and,
as a result of such proceeding, is or was subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
The foregoing summary of the terms of the AT&T Merger is qualified in its
entirety by reference to the text of the Agreement and Plan of Restructuring and
Merger, dated as of June 23, 1998, among AT&T, Italy Merger Corp. and TCI, a
copy of which has been incorporated by reference as Exhibit 7(a), and to the
text of the AT&T/TCI Proxy Statement/Prospectus, a copy of which has been
incorporated by reference as Exhibit 7(b).
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Person, together with its majority-owned subsidiary Liberty
Digital, Inc. ("LDIG"), entered into a Purchase Agreement, dated as of March 29,
2000, with the Issuer (the "Stock Purchase Agreement"), providing for, among
other things, the acquisition (the "Acquisition") by the Reporting Person of (i)
8,000,000 shares of Common Stock (the "Shares") and (ii) a warrant (the
"Warrant") to purchase up to an additional 1,500,000 shares of Common Stock (the
"Warrant Shares") at an exercise price of $25.00 per share (subject to anti-
dilution adjustments) to be issued pursuant to the terms of the Warrant
Agreement, dated as of April 19, 2000, between the Issuer and Liberty Prime (the
"Warrant Agreement"). The Acquisition was consummated on April 19, 2000, with
the Reporting Person paying a cash purchase price of $200,000,000, in the
aggregate, for the Shares and the Warrant. The purchase price was paid with
funds from Liberty's existing cash reserves.
Page 5 of 15
<PAGE>
The foregoing summary of the terms of the Acquisition is qualified in its
entirety by reference to the full texts of the Stock Purchase Agreement, Warrant
Agreement and Warrant, which are included as Exhibit 7(c), 7(d) and 7(e),
respectively, to this Statement and are incorporated herein by reference.
Item 4. Purpose of Transaction.
The Reporting Person currently holds its interest in the Issuer for
investment purposes. Pursuant to the Stock Purchase Agreement, Liberty may not
encumber, sell, transfer or otherwise dispose of the Shares, the Warrant or the
Warrant Shares prior to April 19, 2001, other than to a subsidiary of the
Reporting Person or to secure a bona fide debt.
Pursuant to the Stock Purchase Agreement, Liberty received an option (the
"Option") to acquire 12.5% of the equity of Primedia Broadband Video, LLC.
("Primedia Broadband"), a wholly owned subsidiary of the Issuer. Primedia
Broadband is to obtain a non-exclusive license from the Issuer for the use of
the Issuer's consumer and other assets in the provision of consumer-oriented
broadband video, interactive video and streaming video products and services.
The Option is exercisable until July 18, 2000, at an exercise price equal to the
negotiated fair market value of the equity to be purchased. The exercise price
is payable, at Liberty's election, in shares of Liberty Media Group Class A
common stock, in shares of LDIG Series A common stock or cash. The Stock
Purchase Agreement provides that Liberty may assign the Option to LDIG.
Pursuant to the Stock Purchase Agreement, the Issuer purchased from LDIG
625,000 shares of LDIG Series A common stock for $25,000,000 cash.
The Reporting Person intends to continuously review its investment in the
Issuer, and may in the future determine (i) to acquire additional securities of
the Issuer, through open market purchases, private agreements or otherwise, (ii)
to dispose of all or a portion of the securities of the Issuer owned by it or
(iii) to take any other available course of action, which could involve one or
more of the types of transactions or have one or more of the results described
in the next paragraph of this Item 4. Notwithstanding anything contained
herein, the Reporting Person specifically reserves the right to change its
intention with respect to any or all of such matters. In reaching any decision
as to its course of action (as well as to the specific elements thereof), the
Reporting Person currently expects that it would take into consideration a
variety of factors, including, but not limited to, the following: the Issuer's
business and prospects; other developments concerning the Issuer and the
consumer and business-to-business media industries generally; other business
opportunities available to the Reporting Person; developments with respect to
the business of the Reporting Person; changes in law and government regulations;
general economic conditions; and money and stock market conditions, including
the market price of the securities of the Issuer.
Page 6 of 15
<PAGE>
Other than as set forth in this Statement, the Reporting Person has no
present plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or of
any of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term
of directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy
of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control
of the Issuer by any person;
(h) A class of securities of the Issuer being delisted from a national
securities exchange or ceasing to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or
(j) Any action similar to any of those enumerated in this paragraph.
In addition, the matters set forth in Item 6 are incorporated in this Item
4 by reference as if fully set forth herein.
Item 5. Interest in Securities of the Issuer.
(a) After giving effect to the Acquisition, Liberty beneficially owns
through its subsidiary, Liberty Prime, 9,500,000 shares of Common Stock. Based
on the 149,473,383 shares of Common Stock that were issued and outstanding as of
March 13, 2000 (as indicated in the Issuer's Proxy Statement on Schedule 14A,
dated April 18, 2000), the 9,500,000 shares beneficially owned by the Reporting
Person represented on that date, on a pro forma basis calculated in accordance
with Rule 13d-3 of the Exchange Act, 6.0% of the issued and outstanding shares
of Common Stock. Of the 9,500,000 shares beneficially owned by the Reporting
Person, 1,500,000 of those shares are represented by the Warrant, which is
immediately exercisable.
Page 7 of 15
<PAGE>
Except as described in the preceding paragraph, to the knowledge of the
Reporting Person, none of the Schedule 1 Persons and none of the Schedule 2
Persons beneficially owns any shares of Common Stock.
(b) Liberty has the sole power to vote or to direct the voting of the
Shares and the sole power to dispose of, or to direct the disposition of, the
Shares.
(c) Except for (i) the acquisition by Liberty Prime of 8,000,000 shares of
Common Stock and the Warrant pursuant to the Stock Purchase Agreement and (ii)
the right of Liberty Prime to acquire 1,500,000 shares of Common Stock upon
exercise of the Warrant, no transactions in the shares of Common Stock have been
effected by the Reporting Person or, to the knowledge of the Reporting Person,
by any of the Schedule 1 Persons or Schedule 2 Persons during the past 60 days.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
Except as described below and in Items 3 and 4 above, there are no
contracts, arrangements, understandings or relationships (legal or otherwise)
among the persons named in Item 2 above and between such persons and any other
person with respect to any securities of the Issuer.
Liberty Prime has entered into a registration rights agreement, dated April
19, 2000 (the "Registration Rights Agreement"), with the Issuer, pursuant to
which Liberty Prime has been given certain rights, commencing after April 19,
2001, to cause the Issuer to register under the Securities Act of 1933, as
amended, the offer and sale of the Shares and Warrant Shares acquired by
Liberty from the Issuer.
The foregoing summary of the terms of the Registration Rights Agreement is
qualified in its entirety by reference to the full text of the Registration
Rights Agreement, which is included as Exhibit 7(f) to this Statement and is
incorporated herein by reference.
Item 7. Materials to be Filed as Exhibits.
Exhibit No. Exhibit
- ----------- -------
7(a) Agreement and Plan of Restructuring and Merger, dated as of June
23, 1998, among AT&T Corp., Italy Merger Corp. and Tele-
Communications, Inc. (incorporated by reference to Appendix A to
the AT&T/TCI Proxy Statement/Prospectus that forms a part of the
Registration Statement on Form S-4 of AT&T (File No. 333-70279)
filed on January 8, 1999 (the "AT&T Registration Statement")).
Page 8 of 15
<PAGE>
Exhibit No. Exhibit
- ----------- -------
7(b) AT&T/TCI Proxy Statement/Prospectus (incorporated by reference to
the AT&T Registration Statement).
7(c) Stock Purchase Agreement, among Liberty, LDIG and the Issuer,
dated as of March 29, 2000.
7(d) Warrant Agreement, dated as of April 19, 2000, between the Issuer
and Liberty Prime.
7(e) Warrant, dated April 19, 2000, made by the Issuer in favor of
Liberty Prime.
7(f) Registration Rights Agreement, dated as of April 19, 2000,
between the Issuer and Liberty Prime.
Page 9 of 15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 1, 2000
LIBERTY MEDIA CORPORATION
By: /s/ Vivian J. Carr
---------------------
Name: Vivian J. Carr
Title: Vice President
Page 10 of 15
<PAGE>
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS
OF
LIBERTY MEDIA CORPORATION
The name and present principal occupation of each director and executive
officer of the Reporting Person are set forth below. The business address for
each person listed below is c/o Liberty Media Corporation, 9197 South Peoria
Street, Englewood, Colorado 80112. All executive officers and directors listed
on this Schedule 1 are United States citizens, except for David J.A. Flowers,
who is a Canadian citizen.
<TABLE>
<CAPTION>
Name Principal Occupation
- ---- --------------------
<S> <C>
John C. Malone Chairman of the Board and Director of the Reporting Person;
Director of AT&T Corp.
Robert R. Bennett President, Chief Executive Officer and Director of the Reporting
Person
Gary S. Howard Executive Vice President, Chief Operating Officer and Director
of the Reporting Person
Daniel E. Somers Director of the Reporting Person; President and Chief Executive
Officer of AT&T Broadband, LLC (f/k/a Tele-Communications,
Inc.)
John C. Petrillo Director of the Reporting Person; Executive Vice President,
Corporate Strategy and Business Development of AT&T Corp.
Larry E. Romrell Director of the Reporting Person; Consultant to AT&T Broadband,
LLC (f/k/a Tele-Communications, Inc.)
Jerome H. Kern Director of the Reporting Person; Chairman of the Board and
Chief Executive Officer of On Command Corporation
Paul A. Gould Director of the Reporting Person; Managing Director of Allen &
Company Incorporated
John D. Zeglis Director of the Reporting Person; Director and President of AT&T
Corp.; Chairman of the Board and Chief Executive Officer of
AT&T Wireless Group
David B. Koff Senior Vice President and Assistant Secretary of the Reporting
Person
Charles Y. Tanabe Senior Vice President, General Counsel and Assistant Secretary
of the Reporting Person
</TABLE>
Page 11 of 15
<PAGE>
<TABLE>
<CAPTION>
Name Principal Occupation
- ---- --------------------
<S> <C>
Carl E. Vogel Senior Vice President of the Reporting Person
Peter Zolintakis Senior Vice President of the Reporting Person
Vivian J. Carr Vice President and Secretary of the Reporting Person
Kathryn Scherff Vice President and Controller of the Reporting Person
David J.A. Flowers Vice President and Treasurer of the Reporting Person
</TABLE>
Page 12 of 15
<PAGE>
SCHEDULE 2
DIRECTORS AND EXECUTIVE OFFICERS
OF
AT&T CORP.
The name and present principal occupation of each director and executive
officer of AT&T Corp. are set forth below. The business address for each person
listed below is c/o AT&T Corp., 295 North Maple Avenue, Basking Ridge, New
Jersey 07920. All executive officers and directors listed on this Schedule 2
are United States citizens.
<TABLE>
<CAPTION>
Name Title
- ---- -----
<S> <C>
C. Michael Armstrong Chairman of the Board, Chief Executive Officer and Director
Kenneth T. Derr Director; Chairman of the Board, Retired, of Chevron Corporation
M. Kathryn Eickhoff Director; President of Eickhoff Economics Incorporated
Walter Y. Elisha Director; Chairman of the Board and Chief Executive Officer,
Retired, of Springs Industries, Inc.
George M. C. Fisher Director; Chairman of the Board of Eastman Kodak Company
Donald V. Fites Director; Chairman of the Board, Retired, of Caterpillar, Inc.
Amos B. Hostetter, Jr. Director; Chairman of the Board of Pilot House Associates
Ralph S. Larsen Director; Chairman of the Board and Chief Executive Officer of
Johnson & Johnson
John C. Malone Director; Chairman of the Board of the Reporting Person
Donald F. McHenry Director; President of The IRC Group LLC
Michael I. Sovern Director; President Emeritus and Chancellor Kent Professor of Law at
Columbia University
Sanford I. Weill Director; Chairman of the Board and Co-CEO of Citigroup Inc.
Thomas H. Wyman Director
John D. Zeglis President of AT&T Corp.; Chief Executive Officer of AT&T Wireless
Group and Director
Harold W. Burlingame Executive Vice President, Merger & Joint Venture Integration
</TABLE>
Page 13 of 15
<PAGE>
<TABLE>
<CAPTION>
Name Title
- ---- -----
<S> <C>
James W. Cicconi Executive Vice President-Law & Government Affairs and General
Counsel
Mirian M. Graddick Executive Vice President, Human Resources
Frank Ianna Executive Vice President and President, AT&T Network Services
Michael G. Keith Executive Vice President, AT&T Wireless Group
Richard J. Martin Executive Vice President, Public Relations and Employee
Communication
David C. Nagel President of AT&T Labs; Chief Technology Officer
John C. Petrillo Executive Vice President, Corporate Strategy and Business
Development
Richard R. Roscitt Executive Vice President and President of AT&T Business Services
Daniel E. Somers President and CEO of AT&T Broadband
</TABLE>
Page 14 of 15
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
7(a) Agreement and Plan of Restructuring and Merger, dated as of June
23, 1998, among AT&T Corp., Italy Merger Corp. and Tele-
Communications, Inc. (incorporated by reference to Appendix A to
the AT&T/TCI Proxy Statement/Prospectus that forms a part of the
Registration Statement on Form S-4 of AT&T (File No. 333-70279)
filed on January 8, 1999 (the "AT&T Registration Statement")).
7(b) AT&T/TCI Proxy Statement/Prospectus (incorporated by reference to
the AT&T Registration Statement).
7(c) Stock Purchase Agreement, among Liberty, LDIG and the Issuer,
dated as of March 29, 2000.
7(d) Warrant Agreement, dated as of April 19, 2000, between the Issuer
and Liberty Prime.
7(e) Warrant, dated April 19, 2000, made by the Issuer in favor of
Liberty Prime.
7(f) Registration Rights Agreement, dated as of April 19, 2000,
between the Issuer and Liberty Prime.
Page 15 of 15
<PAGE>
EXHIBIT 7(c)
================================================================================
STOCK PURCHASE AGREEMENT
by and among
PRIMEDIA INC.,
LIBERTY MEDIA CORPORATION
and
LIBERTY DIGITAL, INC.
dated as of March 29, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I AGREEMENT TO SELL AND PURCHASE................................... 2
SECTION 1.1 Authorization of Shares................................. 2
SECTION 1.2 Sale and Purchase....................................... 2
SECTION 1.3 The Option.............................................. 3
SECTION 1.4 The Post-Option......................................... 4
ARTICLE II CLOSING, DELIVERY AND PAYMENT.................................... 6
SECTION 2.1 Closing................................................. 6
SECTION 2.2 Closing Deliveries and Payment for the Shares
and the LDIG Purchase Shares............................... 6
SECTION 2.3 Closing Deliveries and Payment for the Option
or the Post-Option......................................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 10
SECTION 3.1 Organization, Good Standing and Qualification.......... 10
SECTION 3.2 Subsidiaries........................................... 11
SECTION 3.3 Capitalization; Voting Rights.......................... 11
SECTION 3.4 Requisite Power and Authority.......................... 12
SECTION 3.5 SEC Reports; Financial Statements...................... 13
SECTION 3.6 Undisclosed Liabilities................................ 13
SECTION 3.7 Affiliate Agreements................................... 14
SECTION 3.8 Absence of Certain Changes............................. 14
SECTION 3.9 Title to Properties and Assets; Liens, Condition, Etc.. 14
SECTION 3.10 Intellectual Property................................. 15
SECTION 3.11 Compliance with Law; Other Instruments................ 15
SECTION 3.12 Litigation............................................ 16
SECTION 3.13 Tax Matters........................................... 16
SECTION 3.14 Employees............................................. 16
SECTION 3.15 Environmental and Safety Laws......................... 17
SECTION 3.16 Offering Valid........................................ 18
SECTION 3.17 Permits............................................... 18
SECTION 3.18 No Broker............................................. 18
SECTION 3.19 Organization, Good Standing and Qualification of PBV.. 18
SECTION 3.20 Investment Representations............................ 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER............... 19
SECTION 4.1 Requisite Power and Authority.......................... 19
SECTION 4.2 Investment Representations............................. 19
SECTION 4.3 Litigation............................................. 20
i
<PAGE>
Page
SECTION 4.4 No Broker.............................................. 20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF LIBERTY
DIGITAL................................................... 20
SECTION 5.1 Organization, Good Standing and Qualification.......... 20
SECTION 5.2 Subsidiaries........................................... 21
SECTION 5.3 Capitalization; Voting Rights.......................... 21
SECTION 5.4 Authorization; Binding Obligations..................... 22
SECTION 5.5 SEC Reports; Financial Statements...................... 22
SECTION 5.6 Undisclosed Liabilities................................ 23
SECTION 5.7 Affiliate Agreements................................... 23
SECTION 5.8 Absence of Certain Changes. ........................... 23
SECTION 5.9 Title to Properties and Assets; Liens, Condition, Etc.. 23
SECTION 5.10 Intellectual Property................................. 24
SECTION 5.11 Compliance with Law; Other Instruments................ 24
SECTION 5.12 Litigation............................................ 25
SECTION 5.13 Tax Matters........................................... 25
SECTION 5.14 Employees............................................. 25
SECTION 5.15 Environmental and Safety Laws......................... 26
SECTION 5.16 Offering Valid........................................ 26
SECTION 5.17 Permits............................................... 26
SECTION 5.18 No Broker............................................. 26
ARTICLE VI ADDITIONAL AGREEMENTS..................................... 27
SECTION 6.1 Access................................................. 27
SECTION 6.2 Efforts................................................ 27
SECTION 6.3 Regulatory and Other Authorizations; Notices and
Consents.................................................. 28
SECTION 6.4 Transfer Restrictions.................................. 28
SECTION 6.5 Registration Rights.................................... 30
SECTION 6.6 Further Strategic Relationships........................ 31
SECTION 6.7 Adjustment to the Option Purchase Price or
the Post-Option Purchase Price............................ 31
SECTION 6.8 Public Announcements................................... 31
SECTION 6.9 Confidentiality........................................ 31
SECTION 6.10 No-Solicitation....................................... 32
SECTION 6.11 Formation of PBV; IPO................................. 32
SECTION 6.12 Listing of Shares in PBV.............................. 33
ARTICLE VII CONDITIONS TO CLOSING..................................... 33
SECTION 7.1 Purchase Closing Conditions............................ 33
SECTION 7.2 Option Closing Conditions.............................. 38
ii
<PAGE>
ARTICLE VIII MISCELLANEOUS............................................. 40
SECTION 8.1 Other Definitions...................................... 40
SECTION 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial...... 41
SECTION 8.3 Successors and Assigns; Assignment..................... 41
SECTION 8.4 Entire Agreement; Supersedes Prior Agreement........... 41
SECTION 8.5 Severability........................................... 41
SECTION 8.6 Amendment and Waiver................................... 41
SECTION 8.7 Delays or Omissions.................................... 41
SECTION 8.8 Notices................................................ 42
SECTION 8.9 Expenses............................................... 43
SECTION 8.10 Titles and Subtitles.................................. 43
SECTION 8.11 Termination........................................... 43
SECTION 8.12 Counterparts; Execution by Facsimile Signature........ 43
Schedules
Schedule 3.3(d) Company's Capitalization
Schedule 3.13 Company's Tax Matters
Schedule 5.13 Liberty Digital Tax Letter
Exhibits
Exhibit A -- Form of Registration Rights Agreement
Exhibit B -- Warrant Term Sheet
iii
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
---------
March 29, 2000, among PRIMEDIA INC., a Delaware corporation (the "Company"),
-------
LIBERTY MEDIA CORPORATION, a Delaware corporation ("Purchaser"), and LIBERTY
---------
DIGITAL, INC., a Delaware corporation and a majority owned Subsidiary (as
defined herein) of Purchaser ("Liberty Digital").
---------------
RECITALS
--------
WHEREAS, the Company has authorized the sale and issuance to Purchaser of
an aggregate of 8,000,000 shares of the Company's common stock, par value $0.01
per share (the "Common Stock"), and the issuance of warrants (the "Warrants") to
------------ --------
purchase initially up to 1,500,000 shares of Common Stock, on the terms and
conditions set forth herein;
WHEREAS, Purchaser desires to purchase from the Company 8,000,000 shares
of Common Stock and the Warrants, on the terms and conditions set forth herein;
WHEREAS, the Warrants will be issued pursuant to a warrant agreement (the
"Warrant Agreement") with the terms described in Exhibit B hereto and with such
-----------------
other terms and conditions as the Company and Purchaser shall agree and which
shall be in form and substance reasonably satisfactory to the Company and
Purchaser;
WHEREAS, in connection with the sale of the Common Stock by the Company to
Purchaser, the Company has agreed to grant to Purchaser an option to purchase
membership units representing 12.5% of the issued and outstanding membership
units as of the Option Closing Date (as defined herein) in PRIMEDIA Broadband
Video, LLC, a Delaware limited liability company and a wholly owned Subsidiary
of the Company ("PBV"), and, if the Option Closing Date does not occur for the
---
reasons described in Section 1.3(d) hereof, the Company has agreed to grant to
Purchaser the Post-Option (as defined herein) with respect to PBV;
WHEREAS, Purchaser desires to obtain each such option, on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell such shares of Common Stock
and the Warrants to Purchaser and grant each such option to Purchaser on the
terms and conditions set forth herein;
WHEREAS, Liberty Digital has authorized the sale and issuance to the
Company of an aggregrate of 625,000 shares of Liberty Digital's Series A Common
Stock, par value $.01 per share (the "LDIG Common Stock"), on the terms and
-----------------
conditions set forth herein;
WHEREAS, the Company desires to purchase from Liberty Digital 625,000
shares of LDIG Common Stock, on the terms and conditions set forth herein; and
<PAGE>
2
WHEREAS, Liberty Digital desires to issue and sell such shares of LDIG
Common Stock to the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
AGREEMENT TO SELL AND PURCHASE
------------------------------
SECTION 1.1 Authorization of Shares. (a) The Company has authorized the
-----------------------
sale and issuance to Purchaser of 8,000,000 shares of Common Stock (the
"Shares") and the issuance to Purchaser of the Warrants. The shares of Common
------
Stock issuable upon the exercise of the Warrants shall be referred to herein as
the "Warrant Shares".
--------------
(b) Liberty Digital has authorized the sale and issuance to the Company of
625,000 shares of LDIG Common Stock (the "LDIG Purchase Shares").
--------------------
SECTION 1.2 Sale and Purchase. (a) Subject to the terms and conditions
-----------------
hereof, the Company hereby agrees to issue and sell to Purchaser (or its
designee; provided, that such designee is a direct or indirect wholly owned
--------
Subsidiary of Purchaser and agrees to be bound by all of the terms and
provisions of this Agreement and the applicable Registration Rights Agreement
(as defined herein) that are applicable to Purchaser; and provided, further,
-------- -------
that Purchaser shall not be relieved of liability for any of its obligations
hereunder) and Purchaser hereby agrees to purchase (or cause such designee to
purchase) from the Company for cash, the Shares, free and clear of any
Encumbrances (as defined below) (other than those (x) imposed by the federal or
state securities laws or (y) placed thereon by or on behalf of Purchaser), at a
purchase price of $25.00 per Share for an aggregate purchase price of
$200,000,000 (the "Share Purchase Price"). In connection with the purchase of
--------------------
the Shares, the Company hereby agrees to issue to Purchaser (or its designee),
on the Purchase Closing Date (as defined herein), the Warrants.
(b) Subject to the terms and conditions hereof, Liberty Digital hereby
agrees to issue and sell to the Company (or its designee; provided, that such
--------
designee is a direct or indirect wholly owned Subsidiary of the Company and
agrees to be bound by all of the terms and provisions of this Agreement and the
applicable Registration Rights Agreement that are applicable to the Company; and
provided, further, that the Company shall not be relieved of liability for any
- -------- -------
of its obligations hereunder) and the Company hereby agrees to purchase (or
cause such designee to purchase) from Liberty Digital for cash, the LDIG
Purchase Shares, free and clear of any Encumbrances (other than those (x)
imposed by the federal or state securities laws or (y) placed thereon by or on
behalf of the Company), at a purchase price of $40.00 per LDIG Purchase Share
for an aggregate purchase price of $25,000,000 (the "LDIG Share Purchase
-------------------
Price").
- -----
<PAGE>
3
SECTION 1.3 The Option. (a) In connection with the purchase of the Shares,
----------
the Company hereby grants to Purchaser an irrevocable option (the "Option") to
------
purchase a number of membership units representing 12.5% of the issued and
outstanding membership interests in PBV as of the Option Closing Date (as
defined herein) (the "PBV Units"), at a purchase price (the "Option Purchase
--------- ---------------
Price") equal to the fair market value of the PBV Units on the date that
- -----
Purchaser delivers an Option Notice to the Company, payable, at Purchaser's
option, in (i) cash, (ii) shares of LDIG Common Stock or (iii) shares of Liberty
Media Group Class A Common Stock, par value $.01 per share (the "Liberty Media
-------------
Common Stock"). For the purposes of this Section 1.3(a), the "fair market value"
- ------------
of the PBV Units will be negotiated by the parties hereto in good faith. The
Option Purchase Price shall be subject to adjustment as provided in Section 6.7.
(b) The Option may be exercised by Purchaser at any time commencing on the
Purchase Closing and ending at midnight on the date which is ninety (90) days
after the Purchase Closing (the "Option Expiration Date"). Purchaser may assign
----------------------
its right to exercise the Option to Liberty Digital, in which case, Liberty
Digital shall assume all of the rights and obligations of Purchaser hereunder
with respect to the Option.
(c) In the event Purchaser wishes to exercise the Option, Purchaser shall
send a written notice to the Company of its intention to exercise the Option, in
whole but not in part (the "Option Notice"), specifying (A) whether the Option
Purchase Price will be paid in cash, LDIG Common Stock or Liberty Media Common
Stock, and (B) the place, time and date (the "Option Closing Date") of the
-------------------
closing of such purchase (the "Option Closing"), which date shall not be less
--------------
than three (3) business days and not more than five (5) business days from the
date on which the conditions specified in Section 7.2 hereof are satisfied or
waived, or within such other time frame as the Company and Purchaser may
mutually agree. Within five (5) business days of the delivery of the Option
Notice, (i) (x) if Purchaser elects to pay the Option Purchase Price with cash,
Purchaser shall deliver a certificate to the Company, executed by an authorized
officer of Purchaser, containing representations and warranties in the form set
forth in Article IV, with appropriate changes to reflect the fact that Purchaser
is purchasing the PBV Units, (y) if Purchaser elects to pay the Option Purchase
Price with LDIG Common Stock, Purchaser shall deliver a certificate to the
Company, executed by an authorized officer of Purchaser (any certificate
delivered pursuant to clause (x) or (y), the "Liberty Certificate"), containing
-------------------
representations and warranties with respect to Liberty Digital and its
Subsidiaries and the LDIG Shares (as defined below) substantially in the form
set forth in Article V and the representations contained in Section 4.2, or (z)
if Purchaser shall elect to pay the Option Purchase Price with Liberty Media
Common Stock, Purchaser shall (1) execute the Liberty Certificate solely with
respect to the representations in the form set forth in Section 4.2 and (2)
cause AT&T Corp., a New York corporation ("AT&T"), to deliver a certificate to
----
the Company, executed by an authorized officer of AT&T (the "AT&T Certificate"),
----------------
containing representations and warranties with respect to AT&T in substantially
the form of those contained in Sections 5.1, 5.3(e), 5.4, 5.5, 5.11 and 5.16,
with appropriate modifications to reflect the fact that AT&T is issuing shares
of Liberty Media Common Stock and entering into the applicable Registration
Rights Agreement, and (ii) the Company shall deliver a certificate to Purchaser,
executed by an authorized officer of the Company (the "Company Certificate"),
-------------------
containing representations and
<PAGE>
4
warranties in the form set forth in Sections 3.16 and if Purchaser does not
elect to pay the Option Purchase Price with cash, 3.20 hereof.
(d) In the event that the parties cannot agree on the fair market value of
the PBV Units by the later of (x) the Option Expiration Date or (y) 30 days
after the date of the Option Notice, all rights of Purchaser with respect to the
Option shall expire and terminate and, except as described in Section 1.4,
Purchaser shall have no further rights to purchase PBV Units or any other
interest in PBV.
SECTION 1.4 The Post-Option. (a) In the event that the Option terminates
---------------
pursuant to Section 1.3(d), the Company hereby grants to Purchaser, as of the
date of such termination, an irrevocable option (the "Post-Option") to purchase
-----------
a number of membership units (or an equivalent amount of common stock or other
equity in PBV, if PBV is not a limited liability company at that time) that
would give Purchaser a percentage equity interest in the issued and outstanding
membership units (or common stock or other equity) in PBV equal to the
percentage equity interest that Purchaser would have owned in PBV on the date of
the Post- Option Notice (as defined below) had Purchaser exercised the Option
(the "Post-Option PBV Units"), at a purchase price (the "Post-Option Purchase
--------------------- --------------------
Price") equal to the fair market value of the Post-Option PBV Units (determined
- -----
as described in Section 1.3(a)) on the date that Purchaser delivers a
Post-Option Exercise Notice (as defined below) to the Company, payable, at
Purchaser's option, in (i) cash, (ii) shares of LDIG Common Stock or (iii)
shares of Liberty Media Common Stock. The Post-Option Purchase Price shall be
subject to adjustment as provided in Section 6.7.
(b) The Company hereby agrees to notify Purchaser of its intention to file
documents relating to an initial public offering of PBV (the "Post-Option
-----------
Notice") at least 120 days in advance of the date on which the Company, in good
- ------
faith, anticipates filing such documents. The Post-Option may be exercised by
Purchaser at any time commencing on the date on which Purchaser receives the
Post-Option Notice and ending on midnight of the date which is thirty (30) days
after such date. Purchaser may assign its right to exercise the Post-Option to
Liberty Digital, in which case Liberty Digital shall assume all of the rights
and obligations of Purchaser hereunder with respect to the Post-Option.
(c) In the event Purchaser wishes to exercise the Post-Option, Purchaser
shall send a written notice to the Company of its intention to exercise the
Post-Option, in whole but not in part (the "Post-Option Exercise Notice"),
---------------------------
specifying (A) whether the Post-Option Purchase Price will be paid in cash, LDIG
Common Stock or Liberty Media Common Stock and (B) the place, time and date (the
"Post-Option Closing Date") of the closing of such purchase (the "Post-Option
------------------------ -----------
Closing"), which date shall not be less than three (3) business days and not
- -------
more than five (5) business days from the date on which the conditions specified
in Section 7.2 hereof (as modified as set forth in clause (f) below) are
satisfied or waived, or within such other time frame following satisfaction of
such conditions as the Company and Purchaser may mutually agree. Within five (5)
business days of the delivery of the Post-Option Exercise Notice, (i) the
Company shall deliver to Purchaser a certificate, signed by an authorized
officer of the Company (the "Post-Option Company Certificate"), containing (x)
-------------------------------
representations and warranties with respect
<PAGE>
5
to PBV and the Post-Option PBV Units substantially similar in scope to those
provided by the Company as to itself and its Subsidiaries and the Shares in
Article III (with such changes as are necessary to reflect that PBV is not a
public company and is a consolidated Subsidiary of the Company) and (y)
representations substantially similar to those contained in Sections 3.16 and if
Purchaser does not elect to pay the Post-Option Purchase Price with cash, 3.20
hereof, and (ii) (x) if Purchaser elects to pay the Post-Option Purchase Price
with cash, Purchaser shall deliver a certificate to the Company, executed by an
authorized officer of Purchaser (any certificate delivered pursuant to clause
(x) or (y), the "Post-Option Liberty Certificate"), containing representations
-------------------------------
and warranties in the form set forth in Article IV, with appropriate changes to
reflect the fact that Purchaser is purchasing the Post-Option PBV Units, (y) if
Purchaser elects to pay the Post-Option Purchase Price with LDIG Common Stock,
Purchaser shall deliver a certificate to the Company, executed by an authorized
officer of Purchaser, containing representations and warranties with respect to
Liberty Digital and its Subsidiaries and the Post- Option LDIG Shares (as
defined below) substantially in the form set forth in Article V and Section 4.2,
or (z) if Purchaser shall elect to pay the Post-Option Purchase Price with
Liberty Media Common Stock, Purchaser shall (1) execute the Post-Option Liberty
Certificate solely with respect to the representations in the form set forth in
Section 4.2 and (2) cause AT&T Corp., a New York corporation ("AT&T") to deliver
----
a certificate to the Company, executed by an authorized officer of AT&T (the
"AT&T Certificate"), containing representations and warranties with respect to
----------------
AT&T in substantially the form of those contained in Sections 5.1, 5.3(e), 5.4,
5.5, 5.11 and 5.16, with appropriate modifications to reflect the fact that AT&T
is issuing shares of Liberty Media Common Stock and entering into the applicable
Registration Rights Agreement. If Purchaser or Liberty Digital exercises the
Post-Option, its officers, employees, auditors and other agents, shall be given
not less than 30 days to negotiate the Post-Option Purchase Price with the
Company, during which time they shall be afforded the opportunity, during normal
business hours, (i) to discuss with the officers and employees of the Company
and PBV the affairs, finances, accounts, assets and operations of PBV and (ii)
to review such financial, operating and other data as they may reasonably
request. All such information shall be subject to the confidentiality provisions
contained in Section 6.1(b). The parties shall use their good faith efforts to
agree upon the Post-Option Purchase Price as promptly as reasonably practicable
after the Company's delivery of the Post-Option Notice.
(d) At such time as the Company delivers the Post-Option Notice to
Purchaser, the parties shall perform the covenants set forth in Sections 6.2,
6.3, 6.4(d) and (e) and 6.5 (substituting the terms "Post-Option Closing,"
"Post-Option Closing Date," "Post-Option PBV Units" and "Post-Option LDIG
Shares" or "Post-Option Liberty Media Shares," if applicable for the terms
"Option Closing," "Option Closing Date," "PBV Units" and "LDIG Shares" or
"Liberty Media Shares", if applicable, respectively) to the extent necessary to
permit Purchaser to purchase, and the Company to sell, the Post-Option PBV Units
and, if applicable, the Company to acquire the Post-Option LDIG Shares or the
Post-Option Liberty Media Shares as promptly as reasonably practicable after the
determination of the Post-Option Purchase Price.
(e) Notwithstanding the foregoing, the Post-Option will expire, and the
Company will no longer have any obligations under this Section 1.4, on the
earlier to occur of (i) the date on which an initial public offering of PBV is
consummated or (ii) the second anniversary of the
<PAGE>
6
Purchase Closing Date; provided, that the Company has timely complied with its
--------
obligations pursuant to Section 1.4(b), and provided further, that the
-------- -------
Post-Option shall not expire pursuant to this Section 1.4(e) if the Post-Option
Notice has been delivered by the Company unless, within 30 days of the delivery
of such notice, Purchaser has not delivered the Post-Option Exercise Notice or
if Purchaser has delivered such notice within the applicable period, the
Post-Option Closing fails to occur within 90 days of the delivery of such
notice, in which case, the Post- Option shall expire on such later date.
(f) The obligations of Purchaser to purchase, and the Company to sell, the
Post-Option PBV Units shall be subject to satisfaction (or waiver by the
appropriate party) of the conditions set forth in Section 7.2, modified as
follows:
(i) the terms "Post-Option Closing," "Post-Option Closing
Date," "Post-Option PBV Units" and "Post-Option LDIG Shares" or
"Post-Option Liberty Media Shares", if applicable, shall be substituted
for the terms "Option Closing," "Option Closing Date," "PBV Units" and
"LDIG Shares" or Liberty Media Shares", if applicable, respectively; and
(ii) the representations and warranties of the Company, on
the one hand, and Purchaser or AT&T, as the case may be, on the other hand,
to be made at the Post-Option Closing shall be those delivered by each of
the Company and Purchaser (and, if applicable AT&T) to the other within
five business days of the Company's receipt of the Post-Option Exercise
Notice as described in Section 1.4(c).
ARTICLE II
CLOSING, DELIVERY AND PAYMENT
-----------------------------
SECTION 2.1 Closing. The closing of the sale and purchase of the Shares
-------
and the LDIG Purchase Shares under this Agreement (the "Purchase Closing" and,
----------------
together with the Option Closing and the Post-Option Closing, each a "Closing")
-------
shall take place on the fifth business day after the satisfaction or waiver of
the conditions set forth in Section 7.1 hereof, at the offices of Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, or at such
other time or place as the Company, Purchaser and Liberty Digital may mutually
agree (such date for the purchase of the Shares and the LDIG Purchase Shares is
hereinafter referred to as the "Purchase Closing Date" and, together with the
---------------------
Option Closing Date and the Post Option Closing Date, each a "Closing Date").
------------
SECTION 2.2 Closing Deliveries and Payment for the Shares and the LDIG
----------------------------------------------------------
Purchase Shares. (a) At the Purchase Closing, subject to the terms and
- ---------------
conditions hereof, the Company shall deliver to Purchaser:
<PAGE>
7
(i) a certificate or certificates evidencing the Shares, free
and clear of any Encumbrances (other than those (x) imposed by federal or
state securities laws or (y) placed thereon by or on behalf of Purchaser),
registered in the name of Purchaser (or its designee; provided, that such
designee is a direct or indirect wholly owned Subsidiary of Purchaser and
agrees to be bound by all of the terms and provisions of this Agreement and
the applicable Registration Rights Agreements(s) that are applicable to
Purchaser; and provided, further, that Purchaser shall not be relieved of
liability for any of its obligations hereunder);
(ii) a receipt for the Share Purchase Price; and
(iii) an executed counterpart of the Warrant Agreement and
executed certificates in the form attached to the Warrant Agreement,
evidencing the Warrants; and
(iv) the certificates and other documents required to be
delivered pursuant to Section 7.1(a).
(b) At the Purchase Closing, subject to the terms and conditions hereof,
Purchaser shall deliver to the Company:
(i) the Share Purchase Price by wire transfer of immediately
available funds to an account designated by the Company at least two
business days prior to the Purchase Closing Date;
(ii) a receipt for the Shares;
(iii) an executed counterpart of the Warrant Agreement; and
(iv) the certificates and other documents required to be
delivered pursuant to Section 7.1(b).
(c) At the Purchase Closing, subject to the terms and conditions hereof,
the Company shall deliver to Liberty Digital:
(i) the LDIG Share Purchase Price by wire transfer of
immediately available funds to an account designated by Liberty Digital at
least two business days prior to the Purchase Closing Date;
(ii) a receipt for the LDIG Purchase Shares; and
(iii) the certificates and other documents required to be
delivered pursuant to Section 7.1(c).
(d) At the Purchase Closing, subject to the terms and conditions hereof,
Liberty Digital shall deliver to the Company:
<PAGE>
8
(i) a certificate or certificates evidencing the LDIG
Purchase Shares, free and clear of any Encumbrances (other than those (x)
imposed by federal or state securities laws or (y) placed thereon by or on
behalf of the Company), registered in the name of the Company (or its
designee; provided, that such designee is a direct or indirect wholly owned
--------
Subsidiary of the Company and agrees to be bound by all of the terms and
provisions of this Agreement and the applicable Registration Rights
Agreement that are applicable to the Company; and provided, further, that
-------- -------
the Company shall not be relieved of liability for any of its obligations
hereunder);
(ii) a receipt for the LDIG Share Purchase Price; and
(iii) the certificates or other documents required to be
delivered pursuant to Section 7.1(d).
SECTION 2.3 Closing Deliveries and Payment for the Option or the
----------------------------------------------------
Post-Option. (a) At the Option Closing or the Post-Option Closing, as
- -----------
applicable, subject to the terms and conditions hereof, the Company shall
deliver to Purchaser:
(i) a certificate or certificates evidencing the PBV Units or
Post-Option PBV Units, as the case may be, free and clear of any
Encumbrances (other than those (x) imposed by federal or state securities
laws or (y) placed thereon by or on behalf of Purchaser), registered in the
name of Purchaser;
(ii) a receipt for the Option Purchase Price or the Post-
Option Purchase Price, as the case may be; and
(iii) the certificates and other documents required to be
delivered pursuant to Section 7.2(a).
(b) At the Option Closing or the Post-Option Closing, as applicable,
subject to the terms and conditions hereof, Purchaser shall deliver to the
Company:
(i) if Purchaser elects to pay the Option Closing Price or
Post-Option Closing Price:
(1) in cash, the Option Closing Price or Post-Option
Closing Price, as the case may be, by wire transfer of
immediately available funds to an account designated by the
Company at least two business days prior to the Option Closing
Date or the Post-Option Closing Date, as the case may be;
(2) in shares of LDIG Common Stock, a certificate or
certificates evidencing the number of shares of LDIG Common
Stock, free and clear of any Encumbrance (other than those (x)
imposed by federal or state securities laws or (y) placed
thereon by or on behalf of the Company), registered in the
name of the Company (or its designee; provided, that such
--------
designee is a direct or indirect
<PAGE>
9
wholly owned subsidiary of the Company and agrees to be bound
by all of the terms and provisions of this Agreement and the
applicable Registration Rights Agreement that are applicable
to the Company; and provided, further, that the Company shall
-------- -------
not be relieved of liability for any of its obligations
hereunder), equal to the quotient (rounded to the nearest
whole number) derived by dividing (i) in the case of the
Option Closing, the Option Purchase Price by the average of
the last reported sale price (or, if no sale price is reported
on any day, the average of the high and low bid prices on such
day) of a share of LDIG Common Stock on the National Market
tier of the Nasdaq Stock Market ("Nasdaq") on each trading day
------
(the "LDIG Average Market Price") during the period commencing
-------------------------
on the twentieth trading day prior to the Option Closing Date
and ending on the fifth trading day prior to the Option
Closing Date (the "LDIG Shares") or (ii) in the case of the
-----------
Post-Option Closing, the Post-Option Purchase Price by the
LDIG Average Market Price during the period commencing on the
twentieth trading day prior to the Post-Option Closing Date
and ending on the fifth trading day prior to the Post-Option
Closing Date (the "Post-Option LDIG Shares"); or
-----------------------
(3) in shares of Liberty Media Common Stock, a
certificate or certificates evidencing the number of shares of
Liberty Media Common Stock, free and clear of any Encumbrance
(other than those (x) imposed by federal or state securities
laws or (y) placed thereon by or on behalf of the Company),
registered in the name of the Company (or its designee;
provided, that such designee is a direct or indirect wholly
--------
owned subsidiary of the Company and agrees to be bound by all
of the terms and provisions of this Agreement and the
applicable Registration Rights Agreement that are applicable
to the Company; and provided, further, that the Company shall
-------- -------
not be relieved of liability for any of its obligations
hereunder), equal to the quotient (rounded to the nearest
whole number) derived by dividing (i) in the case of the
Option Closing, the Option Purchase Price by the average of
the last reported sale price on the New York Stock Exchange
("NYSE") Composite Transactions Tape (or, if no sale price is
reported on any day, the average of the high and low bid
prices on such day) of a share of Liberty Media Common Stock
on each trading day (the "Liberty Media Average Market Price")
----------------------------------
during the period commencing on the twentieth trading day
prior to the Option Closing Date and ending on the fifth
trading day prior to the Option Closing Date (the "Liberty
-------
Media Shares") or (ii) in the case of the Post-Option Closing,
------------
the Post-Option Purchase Price by the Liberty Media Average
Market Price during the period commencing on the twentieth
trading day prior to the Post-Option Closing Date and ending
on the fifth trading day prior to the Post-Option Closing Date
(the "Post-Option Liberty Media Shares");
--------------------------------
(ii) a receipt for the PBV Units or the Post-Option PBV
Units, as applicable; and
(iii) the certificates and other documents required to
be delivered pursuant to Section 7.2(b).
<PAGE>
10
(c) In the event that at the time Purchaser or Liberty Digital
exercises the Option or the Post-Option or at the applicable Closing, the
Liberty Digital Common Stock and/or the Liberty Media Common Stock is no
longer traded on any national securities exchange or through the Nasdaq
National Market, then Purchaser shall pay the Option Purchase Price or Post-
Option Purchase Price in cash or the security described above that continues
to be traded on a national securities exchange or through Nasdaq.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Purchaser and solely with
respect to Sections 3.4, 3.11, 3.12, 3.18 and 3.20, to Liberty Digital, as
follows:
SECTION 3.1 Organization, Good Standing and Qualification. The Company and
---------------------------------------------
each of its Subsidiaries (as defined below) is a corporation or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, as the case may be, and has all
requisite power and authority to own, lease and operate its properties and
assets and to carry on its business as currently conducted, except for any
failures by any of the Company's Subsidiaries to be so organized, qualified or
in good standing as would not, either individually or in the aggregate, have a
Material Adverse Effect (as defined below) with respect to the Company. The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and the applicable Registration Rights Agreement in the form of
Exhibit A attached hereto (the "Registration Rights Agreement"), to consummate
-----------------------------
the transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The Company and each of its Subsidiaries is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation or other entity in all jurisdictions in which the character or
location of its activities and of the properties owned or operated by it makes
such qualification necessary, except for any such failures to be so qualified,
authorized or in good standing as would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to the Company. The
Company has provided to Purchaser a complete and correct copy of its Certificate
of Incorporation, as amended (the "Certificate"), and of its Amended and
-----------
Restated Bylaws (the "Bylaws"), in each case as amended through the date hereof.
------
For the purposes of this Agreement, "Material Adverse Effect" with respect
-----------------------
to any party shall mean a material adverse effect (i) on the business,
operations, properties, assets, liabilities, financial condition or results of
operations of such party and its Subsidiaries, taken as a whole, other than any
effect resulting from general changes in economic conditions or the securities
market generally, or (ii) on the ability of such party to perform its
obligations under this Agreement and the applicable Registration Rights
Agreement and to consummate the transactions contemplated hereby and thereby.
<PAGE>
11
SECTION 3.2 Subsidiaries. As used herein, "Subsidiary" means (i) any
------------ ----------
corporation of which a majority of the securities entitled to vote generally in
the election of directors thereof, at the time as of which any determination is
being made, are owned by another entity, either directly or indirectly, and (ii)
any joint venture, general or limited partnership, limited liability company or
other legal entity in which an entity is the record or beneficial owner,
directly or indirectly, of a majority of the economic or voting interests or is
the general partner. All shares of capital stock or other equity interests of
any Subsidiary directly or indirectly owned by the Company have been duly
authorized and validly issued, are fully paid and nonassessable and are directly
or indirectly owned by the Company free and clear of any Encumbrance and have
not been issued in violation of, nor subject to, any preemptive, subscription or
other similar rights. "Encumbrance" means any security interest, pledge,
-----------
mortgage, lien (statutory or other), charge, option to purchase, lease, claim,
restriction, covenant, title defect, hypothecation, assignment, deposit
arrangement or other encumbrance of any kind or any preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement).
SECTION 3.3 Capitalization; Voting Rights. (a) As of the date hereof, the
-----------------------------
authorized capital of the Company consists of 250,000,000 shares of Common Stock
and 50,000,000 shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"), of which (i) 2,000,000 were designated $10.00 Series D
---------------
Exchangeable Preferred Stock (the "Series D Preferred Stock"), (ii) 1,250,000
------------------------
were designated $9.20 Series F Exchangeable Preferred Stock (the "Series F
--------
Preferred Stock"), and (iii) 2,500,000 were designated $8.625 Series H
- ---------------
Exchangeable Preferred Stock (the "Series H Preferred Stock").
------------------------
(b) As of the close of business on March 28, 2000, (i) 148,607,539 shares
of Common Stock were issued and outstanding, (ii) 2,146,746 shares of Common
Stock were being held in treasury, and (iii) 2,000,000 shares of Series D
Preferred Stock, 1,250,000 shares of Series F Preferred Stock, and 2,500,000
shares of Series H Preferred Stock, were issued and outstanding.
(c) All issued and outstanding shares of the Company's capital stock (i)
have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, (iii) were issued, offered and sold in compliance with all
applicable state and federal laws concerning the issuance, offer and sale of
securities and (iv) were not issued in violation of, or subject to, any
preemptive, subscription or other similar rights of any other Person (as defined
below).
(d) Except as set forth on Schedule 3.3(d) or in the Company's SEC Reports
(as hereinafter defined), as of the date hereof, there are no outstanding
subscriptions, options, calls, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or stockholder agreements,
or agreements of any kind for the purchase or acquisition from the Company or
any of its Subsidiaries of any of their securities, nor has the Company taken or
agreed to take any action to issue or grant the same. Except as described in
this Agreement or set forth on Schedule 3.3(d), as of the date hereof, (x) there
are no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any securities of the Company or any
voting or equity securities or interests of any of its Subsidiaries, (y) there
are
<PAGE>
12
no voting trust, proxy, stockholder or other agreements or understandings to
which the Company or any of its Subsidiaries or, to the knowledge of the
Company, any of its stockholders is a party or is bound with respect to the
voting or transfer of the capital stock or other voting securities of the
Company or any of its Subsidiaries and (z) there are no other subscriptions,
options, calls, warrants or other rights (including registration rights, whether
demand or piggyback registration rights), agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any of its Subsidiaries to which the Company or any of its
Subsidiaries is a party. Except as set forth on Schedule 3.3(d), the
consummation of the transactions contemplated by this Agreement and the
applicable Registration Rights Agreement will not trigger the anti-dilution
provisions or other price adjustment mechanisms of any subscriptions, options,
calls, warrants, commitments, contracts, preemptive rights, rights of first
refusal, demands, conversion rights or other agreements or arrangements of any
character or nature whatsoever outstanding on the date hereof under which the
Company is obligated to issue or acquire shares of any of its capital stock. The
sale of the Shares is not and will not be subject to any preemptive rights,
rights of first refusal, subscription or similar rights that have not been
properly waived.
(e) The Shares have been duly and validly authorized and when the Shares
are issued and sold in accordance with the provisions of this Agreement, such
shares will be duly authorized, validly issued, fully paid and nonassessable,
will not be issued in violation of any preemptive, subscription or other similar
rights of any Person and will be delivered to Purchaser free and clear of all
Encumbrances (other than those (x) imposed by federal or state securities laws
or (y) placed thereon by or on behalf of Purchaser).
(f) The Warrants have been duly and validly authorized and when the
Warrants are issued in accordance with the provisions of this Agreement, the
Warrants will be duly authorized, validly issued and will be the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Warrant
Agreements subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing. The Warrant Shares have been duly and validly authorized
and when the Warrant Shares are issued upon exercise of the Warrants in
accordance with the term thereof, such shares will be duly authorized, validly
issued, fully paid and nonassessable, will not be issued in violation of any
preemptive, subscription or other similar rights of any Person and will be
delivered to Purchaser free and clear of all Encumbrances (other than those (x)
imposed by federal or state securities laws or (y) placed thereon by or on
behalf of Purchaser).
SECTION 3.4 Requisite Power and Authority. All corporate action on the
-----------------------------
part of the Company, its officers, directors and stockholders necessary for the
execution and delivery of this Agreement, the Warrant Agreement, and the
applicable Registration Rights Agreement, the consummation of the transactions
contemplated hereby and thereby and the performance of all obligations of the
Company hereunder and thereunder has been taken or will be taken prior to the
Purchase Closing. This Agreement has been, and the Warrant Agreement and the
applicable
<PAGE>
13
Registration Rights Agreement will be, duly executed and delivered by the
Company. This Agreement is and the Warrant Agreement and the applicable
Registration Rights Agreement (assuming due execution and delivery by Purchaser
and/or Liberty Digital) will be legal, valid and binding obligations of the
Company enforceable against it in accordance with their terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 3.5 SEC Reports; Financial Statements. (a) The Company has filed
---------------------------------
with the U.S. Securities and Exchange Commission (the "SEC") all forms, reports,
schedules, proxy statements (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "SEC Reports") required to be filed by the Company with the SEC since
-----------
January 1, 1998. As of its date of filing, each of the Company's SEC Reports
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or the Securities Act of
------------
1933, as amended (the "Securities Act"), and the rules and regulations
--------------
promulgated thereunder, and none of such SEC Reports (including any and all
financial statements included therein) contained when filed or (except to the
extent revised or superceded by a subsequent filing with the SEC prior to the
date hereof) contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated financial statements (including the notes
thereto) included in the Company's SEC Reports complied as to form, as of its
date of filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, has been prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
----
(except as may be indicated in the notes thereto) and fairly presents in all
material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended, subject (in the
case of unaudited financial statements) to normal year-end adjustments and any
other adjustments described therein or in the notes or schedules thereto which
are not expected to be material.
SECTION 3.6 Undisclosed Liabilities. Except for (i) those liabilities that
-----------------------
are fully reflected or reserved for in the audited consolidated balance sheet of
the Company included in its Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 as filed with the SEC, and (ii) liabilities incurred since
December 31, 1999 in the ordinary course of business consistent with past
practice, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature whatsoever (whether accrued, absolute, contingent or
otherwise) that are material to the consolidated financial position of the
Company which would be required to be set forth on a balance sheet prepared in
accordance with GAAP.
<PAGE>
14
SECTION 3.7 Affiliate Agreements. (a) Except as disclosed in the Company's
--------------------
SEC Reports, there are no contracts, agreements, understandings or proposed
transactions between the Company or any of its Subsidiaries and any of its
officers, directors or Affiliates or any family member or Affiliate thereof that
would be required to be disclosed pursuant to Item 404 of Regulation S-K of the
SEC.
(b) Neither the Company nor any of its Subsidiaries is, nor to the
Company's knowledge is any other party to any "material contracts" within the
meaning of Item 601 of Regulation S-K of the SEC (the "Material Contracts"), in
------------------
default under, or in breach or violation of, any material term or condition of
any Material Contract and, to the knowledge of the Company, no event has
occurred which, with the giving of notice or passage of time or both would
constitute a default of such a material term or condition by the Company or any
other party under any Material Contract, other than any such events as would
not, either individually or in the aggregate, have a Material Adverse Effect
with respect to the Company. Other than Material Contracts which have terminated
or expired in accordance with their terms, each of the Material Contracts is in
full force and effect and (assuming due execution and delivery by the
counterparties thereto) is a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms (subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing).
SECTION 3.8 Absence of Certain Changes. (a) Except as set forth in
--------------------------
Schedule 3.3(d) or as disclosed in the Company's SEC Reports filed and publicly
available prior to the date hereof, since December 31, 1999, no event, change or
circumstance has occurred which has had, or would reasonably be expected to
result in, either individually or in the aggregate, a Material Adverse Effect
with respect to the Company.
(b) Except as set forth in the Company's SEC Reports filed and publicly
available prior to the date hereof, since December 31, 1999, the Company and its
Subsidiaries have carried on their respective businesses only in the ordinary
and usual course consistent with their past practices.
SECTION 3.9 Title to Properties and Assets; Liens, Condition, Etc. The
------------------------------------------------------
Company and each of its Subsidiaries have good and marketable title to their
respective properties and assets, and good title to their respective leasehold
estates, in each case free and clear of any Encumbrance, other than (i) liens
for current taxes not yet due and payable and (ii) possible minor Encumbrances
which do not in any case materially detract from the value of the property
subject thereto or materially impair the operations of the Company and its
Subsidiaries, and which have not arisen other than in the ordinary course of
business. The Company and each of its Subsidiaries are in compliance with all
material terms of each material lease to which they are a party or are otherwise
bound. All material properties, equipment and systems of the Company and its
Subsidiaries are in good repair, working order and condition and are in material
compliance with all applicable standards and rules imposed (a) by any
governmental agency or
<PAGE>
15
authority in which such properties, equipment and systems are located, and (b)
under any agreements with customers.
SECTION 3.10 Intellectual Property. The Company and its Subsidiaries own
---------------------
or have a valid license to use all trademarks, trade names, service marks,
copyrights and other intellectual property (collectively, "Intellectual
------------
Property") used by them in the conduct of their respective businesses, except
- --------
where the failure to own or have a valid right to use any such Intellectual
Property would not, either individually or in the aggregate, have a Material
Adverse Effect with respect to the Company. Neither the Company nor any of its
Subsidiaries has received any notice or other communication alleging that its
usage of such Intellectual Property violates the intellectual property rights of
any other person.
SECTION 3.11 Compliance with Law; Other Instruments. Neither the Company
--------------------------------------
nor any of its Subsidiaries is in violation or default of (i) the Certificate or
Bylaws or the organizational documents of any Subsidiary or (ii) of any judicial
or administrative judgment, decision, decree, order, settlement, injunction,
writ, stipulation, determination or award (each, an "Order") or any statute,
-----
law, ordinance, rule or regulation (each, a "Law") and has received no notice
---
of, and to the knowledge of the Company, no investigation or review is in
process or threatened by any governmental authority with respect to, any
violation or alleged violation of any Order or Law except, in the case of any
Order or Law, where such violation or default would not, either individually or
in the aggregate, have a Material Adverse Effect with respect to the Company.
The execution, delivery and performance of this Agreement, the Warrant Agreement
and the applicable Registration Rights Agreement, and the consummation of the
transactions contemplated hereby (including the grant of the Option and the
Post-Option and sale of the PBV Units or the Post-Option PBV Units upon exercise
of the Option or the Post-Option, respectively) and thereby, will not result in
(i) any violation, or be in conflict with or constitute a default (with or
without notice or lapse of time or both) under the Certificate or Bylaws or the
organizational documents of any Subsidiary, (ii) any violation, or be in
conflict with or constitute a default (with or without notice or lapse of time
or both) under, any term or provision of, or any right of termination,
cancellation or acceleration arising under any Material Contract, (iii) any
violation under any Order or Law applicable to the Company or any of its
Subsidiaries, its business or operations or any of its assets or properties or
(iv) result in the imposition of any Encumbrance on the business or material
properties or assets of the Company or any of its Subsidiaries, except, in the
case of the foregoing clauses (ii), (iii) and (iv), where such violation,
default, investigation or review would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to the Company. The
execution, delivery and performance of this Agreement, the Warrant Agreement and
the applicable Registration Rights Agreement do not, and the consummation of the
transactions contemplated hereby (including the grant of the Option and sale of
the PBV Units upon the exercise of the Option) and thereby will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any governmental or regulatory authority or any other person,
except as described on Schedule 3.11 and except where the failure to obtain any
such consent, approval, authorization or other action or to make such filing or
notification would not, either individually or in the aggregate, have a Material
Adverse Effect with respect to the Company.
<PAGE>
16
SECTION 3.12 Litigation. Except as described in the Company's SEC Reports
----------
filed and publicly available prior to the date hereof, there is no claim,
action, suit, audit, assessment, arbitration or inquiry, or any proceeding or,
to the Company's knowledge, investigation, by or before any governmental
authority (each, an "Action") pending, or to the Company's knowledge, currently
------
threatened against the Company or any Subsidiary which would, either
individually or in the aggregate, have a Material Adverse Effect with respect to
the Company.
SECTION 3.13 Tax Matters. (a) Except as set forth on Schedule 3.13 and
-----------
except for such matters as would not, either individually or in the aggregate,
have a Material Adverse Effect with respect to the Company, (i) all material Tax
Returns (as defined below) that are required to be filed by or with respect to
the Company and its Subsidiaries have been duly filed with the appropriate
governmental agencies on or prior to the respective due dates (including any
extensions thereof) for such Tax Returns, (ii) all material Taxes (as defined
below) of the Company and its Subsidiaries due and payable, whether or not shown
on the Tax Returns referred to in clause (i), have been paid in full, (iii) the
Tax Returns referred to in clause (i) have been audited by the Internal Revenue
Service or the appropriate state, local or foreign taxing authority or the
period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired, (iv) all material deficiencies asserted or
assessments made as a result of such examinations have been paid in full, (v) no
material issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in clause
(i) are currently pending, (vi) no waiver of statutes of limitation have been
given by or requested with respect to any Taxes of the Company or its
Subsidiaries, (vii) there are no liens for Taxes on any asset of the Company or
any of its Subsidiaries other than for current Taxes not yet due and payable, or
if due, (A) not delinquent or (B) being contested in good faith by appropriate
proceedings and (viii) no consent has been filed relating to the Company or any
of its Subsidiaries pursuant to Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code").
----
(b) For purposes of this Agreement, the term (i) "Taxes" means all taxes,
-----
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to, income, gross receipts, excise, property, sales and use, transfer,
franchise, employment, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto, and (ii)
"Tax Return" means any return, report, information return or other document
----------
(including any related or supporting information) filed or required to be filed
with any taxing authority with respect to Taxes.
SECTION 3.14 Employees. Neither the Company nor any of its Subsidiaries
---------
has any collective bargaining agreements with any of its employees. There is no
labor union organizing activity pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened with respect to the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company or any of its Subsidiaries, nor does
the Company or any of its Subsidiaries have a present intention to terminate the
employment of any
<PAGE>
17
officer, key employee or group of key employees. No employee of the Company or
its Subsidiaries is bound by any contract, agreement or covenant that would
interfere or conflict with or restrict in any way his or her full provision of
services thereto, including any of the foregoing relating to trade secrets,
confidential information or other Intellectual Property.
SECTION 3.15 Environmental and Safety Laws. (a) Except as would not,
-----------------------------
either individually or in the aggregate, have a Material Adverse Effect with
respect to the Company, neither the Company nor any of its Subsidiaries has
failed to comply in any material respect with any Environmental Laws (as defined
below).
(b) Except as would not, individually or in the aggregate, have a Material
Adverse Effect with respect to the Company, neither the Company nor any of its
Subsidiaries has Released (as defined below), generated or disposed of any
Hazardous Substance (as defined below) in a manner which could reasonably be
expected to give rise to a material liability under or relating to any
Environmental Laws.
(c) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to the Company, there is no claim under or
relating to Environmental Laws pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or, to the knowledge
of the Company, pending or threatened against any other Person whose liability
for any environmental claim the Company or any of its Subsidiaries has retained
or assumed either contractually or by operation of law. Except as would not
reasonably be expected to give rise to a material liability under or relating to
any Environmental Laws, no real property currently or formerly owned, operated
or leased by the Company or any of its Subsidiaries has been impacted by any
Release or threatened Release of any Hazardous Substance.
(d) For purposes of this Agreement, the term (i) "Environmental Laws"
------------------
means all applicable federal, foreign, state, local or municipal Laws or Orders
or other legally binding requirements relating to pollution or the protection of
human health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.,
Section 9601, et seq., as amended ("CERCLA"), the Resource Conservation and
------
Recovery Act, 42 U.S.C. Section 6901, et seq., as amended, the Clean Air Act, 42
U.S.C. Section 7401 et seq., as amended, the Clean Water Act, 33 U.S.C. Section
et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601 et seq., and
the Occupational Safety and Health Act, 29 U.S.C. Section 651, et seq.; (ii)
"Hazardous Substances" means any pollutant, contaminant, toxic substance,
--------------------
hazardous waste, hazardous material, or hazardous substance, or any oil,
petroleum or petroleum product, each as defined or listed in, or classified
pursuant to, any Environmental Laws or any other substance or force that could
result in liability under any Environmental Laws; and (iii) "Release" means any
-------
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing (including, without limitation, the
abandonment or discarding of barrels, containers and other receptacles).
SECTION 3.16 Offering Valid. Assuming the accuracy of the representations
--------------
and warranties of the Purchaser contained in Section 4.2 hereof, no registration
under the
<PAGE>
18
Securities Act of the Shares or the Warrants is required for the offer, sale and
issuance of the Shares or the Warrants as contemplated hereby or the issuance of
the Warrant Shares upon exercise of the Warrants.
SECTION 3.17 Permits. The Company and its Subsidiaries hold all licenses,
-------
permits, orders, consents, approvals, registrations, authorizations,
qualifications and filings with and under all federal, state, local or foreign
laws and governmental authorities and all industry or other non-governmental
self-regulatory organizations (each, a "Permit") necessary for the lawful
------
conduct of their respective businesses as they are presently being conducted,
except where the failure to so hold Permits would not, either individually or in
the aggregate, have a Material Adverse Effect with respect to the Company. All
Permits are in full force and effect in all material respects. The Company and
its Subsidiaries have complied in all material respects with the terms of the
Permits and there are no pending modifications, amendments or revocations of any
Permits. All fees due and payable from the Company or any of its Subsidiaries to
governmental authorities or other third parties pursuant to the Permits have
been paid. There are no pending or, to the knowledge of the Company, threatened,
suits, actions, proceedings or, to the Company's knowledge, investigations with
respect to the possible revocation, cancellation, suspension, limitation or
nonrenewal of any Permits, and there has occurred no event which (whether with
notice or lapse of time or both) could reasonably be expected to result in or
constitute the basis for such a revocation, cancellation, suspension, limitation
or nonrenewal thereof.
SECTION 3.18 No Broker. Neither the Company nor any of its Subsidiaries
---------
has employed any broker or finder, or incurred any liability for any brokerage
or finders' fees or any similar fees or commissions in connection with the
transactions contemplated by this Agreement.
SECTION 3.19 Organization, Good Standing and Qualification of PBV. PBV is
----------------------------------------------------
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as currently conducted. PBV has all requisite corporate power and
authority to execute and deliver the applicable Registration Rights Agreement,
to consummate the transactions contemplated thereby and to perform its
obligations thereunder. PBV is duly qualified and is authorized to do business
and is in good standing as a foreign corporation or other entity in all
jurisdictions in which the character or location of its activities and of the
properties owned or operated by it makes such qualification necessary, except
for any such failures to be so qualified, authorized or in good standing as
would not, either individually or in the aggregate, have a Material Adverse
Effect with respect to PBV. The Company has provided to Liberty Digital a
complete and correct copy of PBV's organizational documents, in each case as
amended through the date hereof.
SECTION 3.20 Investment Representations. The Company acknowledges that the
--------------------------
LDIG Purchase Shares have not been registered under the Securities Act or under
any state securities laws. The Company (a) is acquiring the LDIG Purchase Shares
for investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof, (b) is an
"accredited investor" within the meaning of Regulation D,
<PAGE>
19
Rule 501(a), promulgated by the SEC, (c) acknowledges that the LDIG Purchase
Shares must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from the registration requirements of the
Securities Act is available and (d) represents that by reason of its business or
financial experience, the Company has the capacity to protect its own interests
in connection with the transactions contemplated by this Agreement and the
applicable Registration Rights Agreement. The Company acknowledges that it has
had an opportunity to discuss Liberty Digital's business, management and
financial affairs with Liberty Digital's management. The Company acknowledges
that it has had an opportunity to ask questions of and receive answers from
officers of Liberty Digital. The Company understands that such discussions, as
well as any other written information issued by Liberty Digital, were intended
to describe certain aspects of Liberty Digital's business and operations, but
were not an exhaustive description.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.1 Requisite Power and Authority. Purchaser has all requisite
-----------------------------
power and authority to execute and deliver this Agreement, the Warrant Agreement
and the applicable Registration Rights Agreement, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. All corporate action on Purchaser's part necessary for the execution
and delivery of this Agreement, the Warrant Agreement and the applicable
Registration Rights Agreement, the consummation of the transactions contemplated
hereby and thereby and the performance of all obligations of Purchaser hereunder
and thereunder has been or will be taken prior to the Purchase Closing. This
Agreement has been and the Warrant Agreement and the applicable Registration
Rights Agreement will be, duly executed and delivered by Purchaser. This
Agreement, the Warrant Agreement and the applicable Registration Rights
Agreement (assuming due execution and delivery by the Company and/or Liberty
Digital) will be legal, valid and binding obligations of Purchaser, enforceable
against it in accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
SECTION 4.2 Investment Representations. Purchaser acknowledges that the
--------------------------
Shares, the Warrants and the Warrant Shares have not been registered under the
Securities Act or under any state securities laws. Purchaser (a) is acquiring
the Shares, the Warrants and the Warrant Shares for investment for its own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof, (b) is an "accredited investor"
within the meaning of Regulation D, Rule 501(a), promulgated by the SEC, (c)
acknowledges that the Shares, the Warrants and the Warrant Shares must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from the registration requirements of the Securities Act is
available and (d) represents that by reason of its business or
<PAGE>
20
financial experience, Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated by this Agreement and the
applicable Registration Rights Agreement. Purchaser acknowledges that it has had
an opportunity to discuss the Company's business, management and financial
affairs (including the business, management and financial affairs of PBV) with
the Company's management. Purchaser acknowledges that it has had an opportunity
to ask questions of and receive answers from officers of the Company. Purchaser
understands that such discussions, as well as any other written information
issued by the Company, were intended to describe certain aspects of the
Company's business and operations, but were not an exhaustive description.
SECTION 4.3 Litigation. Except as set forth in the Purchaser's SEC Reports
----------
filed and publicly prior to the date hereof, there is no Action pending, or to
Purchaser's knowledge, currently threatened against Purchaser which, would,
individually or in the aggregate, have a Material Adverse Effect with respect to
Purchaser.
SECTION 4.4 No Broker. Purchaser has not employed any broker or finder, or
---------
incurred any liability for any brokerage or finders' fees or any similar fees or
commissions in connection with the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF LIBERTY DIGITAL
-------------------------------------------------
Liberty Digital hereby represents and warrants to the Company as follows:
SECTION 5.1 Organization, Good Standing and Qualification. Liberty Digital
---------------------------------------------
and each of its Subsidiaries is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, as the case may be, and has all requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as currently conducted, except for any failures by any of Liberty
Digital's Subsidiaries to be so organized, qualified or in good standing as
would not, either individually or in the aggregate, have a Material Adverse
Effect with respect to Liberty Digital. Liberty Digital has all requisite
corporate power and authority to execute and deliver this Agreement and the
applicable Registration Rights Agreement, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. Liberty Digital and each of its Subsidiaries is duly qualified and
is authorized to do business and is in good standing as a foreign corporation or
other entity in all jurisdictions in which the character or location of its
activities and of the properties owned or operated by it makes such
qualification necessary, except for any such failures to be so qualified,
authorized or in good standing as would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to Liberty Digital.
Liberty Digital has provided to the Company a complete and correct copy of its
Certificate of Incorporation, as amended (the "Liberty Certificate"), and of its
-------------------
Bylaws (the "Liberty Bylaws"), in each case as amended through the date hereof.
--------------
<PAGE>
21
SECTION 5.2 Subsidiaries. All shares of capital stock or other equity
------------
interests of any Subsidiary directly or indirectly owned by Liberty Digital have
been duly authorized and validly issued, are fully paid and nonassessable and
are directly or indirectly owned by Liberty Digital free and clear of any
Encumbrance and have not been issued in violation of, nor subject to, any
preemptive, subscription or other similar rights.
SECTION 5.3 Capitalization; Voting Rights. (a) The authorized capital
-----------------------------
stock of Liberty Digital consists of (i) 1,755,000,000 shares of common stock,
par value $.01 per share, of which (A) 1,000,000,000 shares are LDIG Common
Stock and (B) 755,000,000 shares are Series B common stock ("LDIG Series B
Stock") and (ii) 5,000,000 shares of preferred stock, par value $.01 per share,
of which 150,000 shares are designated as Class B Preferred Stock ("LDIG
Preferred Stock").
(b) As of the close of business on January 31, 2000 (i) 26,638,479 shares
of LDIG Common Stock and 171,950,167 shares of LDIG Series B Stock were issued
and outstanding, respectively, (ii) no shares of LDIG Common Stock were in
treasury, (iii) 171,950,167 shares of LDIG Common Stock were reserved for
issuance upon conversion of shares of LDIG Series B Stock, (iv) 25,764,600
shares of LDIG Series B Stock was reserved for issuance upon conversion of the
LDIG Preferred Stock, and (v) 150,000 shares of LDIG Preferred Stock were issued
and outstanding. As of December 31, 1999, 2,514,531 shares of LDIG Common Stock
were reserved for future issuance to employees pursuant to outstanding stock
options under Liberty Digital's stock option plans.
(c) All issued and outstanding shares of Liberty Digital's capital stock
(i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, (iii) were issued, offered and sold in compliance with all
applicable state and federal laws concerning the issuance, offer and sale of
securities and (iv) were not issued in violation of, or subject to, any
preemptive, subscription or other similar rights of any other Person.
(d) Except as set forth in Liberty Digital's SEC Reports, as of the date
hereof, (x) there are no outstanding obligations of Liberty Digital or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any securities of
Liberty Digital or any voting or equity securities or interests of any of its
Subsidiaries, and (y) there are no voting trust, proxy, stockholder or other
agreements or understandings to which Liberty Digital or any of its Subsidiaries
or, to the knowledge of Liberty Digital, any of its stockholders is a party or
is bound with respect to the voting or transfer of the capital stock or other
voting securities of Liberty Digital or any of its Subsidiaries. The
consummation of the transactions contemplated by this Agreement and the
applicable Registration Rights Agreement will not trigger the anti-dilution
provisions or other price adjustment mechanisms of any subscriptions, options,
calls, warrants, commitments, contracts, preemptive rights, rights of first
refusal, demands, conversion rights or other agreements or arrangements of any
character or nature whatsoever outstanding on the date hereof under which
Liberty Digital is or may be obligated to issue or acquire shares of any of its
capital stock. The sale of the LDIG Shares is not and will not be subject to any
preemptive rights, rights of first refusal, subscription or similar rights that
have not been properly waived.
<PAGE>
22
(e) The LDIG Purchase Shares have been duly and validly authorized and
when the LDIG Purchase Shares are issued and sold in accordance with the
provisions of this Agreement and the Option, such shares will be duly
authorized, validly issued, fully paid and nonassessable, will not be issued in
violation of any preemptive, subscription or other similar rights of any Person
and will be delivered to the Company free and clear of all Encumbrances (other
than those (x) imposed by federal or state securities laws or (y) placed thereon
by or on behalf of the Company).
SECTION 5.4 Authorization; Binding Obligations. All corporate action on
----------------------------------
the part of Liberty Digital, its officers, directors and stockholders necessary
for the execution and delivery of this Agreement and the applicable Registration
Rights Agreement, the consummation of the transactions contemplated hereby and
thereby and the performance of all obligations of Liberty Digital hereunder and
thereunder has been taken or will be taken prior to the Purchase Closing. This
Agreement has been, and the applicable Registration Rights Agreement will be,
duly executed and delivered by Liberty Digital. This Agreement is and the
applicable Registration Rights Agreement (assuming due execution and delivery by
the Company and Purchaser) will be legal, valid and binding obligations of
Liberty Digital enforceable against it in accordance with their terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 5.5 SEC Reports; Financial Statements. (a) Liberty Digital has
---------------------------------
filed with the SEC all SEC Reports required to be filed by Liberty Digital with
the SEC since January 1, 1998. As of its date of filing, each of Liberty
Digital's SEC Reports complied in all material respects with the requirements of
the Exchange Act or the Securities Act, and the rules and regulations
promulgated thereunder, and none of such SEC Reports (including any and all
financial statements included therein) contained when filed or (except to the
extent revised or superceded by a subsequent filing with the SEC prior to the
date hereof) contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated financial statements (including the notes
thereto) included in Liberty Digital's SEC Reports complied as to form, as of
its date of filing with the SEC, in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, has been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presents in all material respects the consolidated
financial position of Liberty Digital and its consolidated Subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended, subject (in the case of unaudited financial
statements) to normal year-end adjustments and any other adjustments described
therein or in the notes or schedules thereto which are not expected to be
material.
<PAGE>
23
SECTION 5.6 Undisclosed Liabilities. Except for (i) those liabilities that
-----------------------
are fully reflected or reserved for in the audited consolidated balance sheet of
Liberty Digital as of December 31, 1999 and (ii) liabilities incurred since
December 31, 1999 in the ordinary course of business consistent with past
practice, neither Liberty Digital nor any of its Subsidiaries has any
liabilities or obligations of any nature whatsoever (whether accrued, absolute,
contingent or otherwise) that are material to the consolidated financial
position of Liberty Digital which would be required to be set forth on a balance
sheet prepared in accordance with GAAP.
SECTION 5.7 Affiliate Agreements. (a) Except as disclosed in Liberty
--------------------
Digital's SEC Reports, there are no contracts, agreements, understandings or
proposed transactions between Liberty Digital or any of its Subsidiaries and any
of its officers, directors or Affiliates or any family member or Affiliate
thereof that would be required to be disclosed pursuant to Item 404 of
Regulation S-K of the SEC.
(b) Neither Liberty Digital nor any of its Subsidiaries is, nor to Liberty
Digital's knowledge is any other party to any Material Contract, in default
under, or in breach or violation of, any material term or condition of any
Material Contract and, to the knowledge of Liberty Digital, no event has
occurred which, with the giving of notice or passage of time or both would
constitute a default of such a material term or condition by Liberty Digital or
any other party under any Material Contract, other than such events as would
not, either individually or in the aggregate, have a Material Adverse Effect
with respect to Liberty Digital. Other than Material Contracts which have
terminated or expired in accordance with their terms, each of the Material
Contracts is in full force and effect and (assuming due execution and delivery
by the counterparties thereto) is a legal, valid and binding obligation of
Liberty Digital enforceable against Liberty Digital in accordance with its terms
(subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing).
SECTION 5.8 Absence of Certain Changes. (a) Except as disclosed in Liberty
--------------------------
Digital's SEC Reports filed and publicly available prior to the date hereof,
since December 31, 1999, no event, change or circumstance has occurred which has
had, or would reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect with respect to Liberty Digital.
(b) Except as set forth in Liberty Digital's SEC Reports filed and
publicly available prior to the date hereof, since December 31, 1999, Liberty
Digital and its Subsidiaries have carried on their respective businesses only in
the ordinary and usual course consistent with their past practices.
SECTION 5.9 Title to Properties and Assets; Liens, Condition, Etc. Liberty
------------------------------------------------------
Digital and each of its Subsidiaries have good and marketable title to their
respective properties and assets, and good title to their respective leasehold
estates, in each case free and clear of any Encumbrance, other than (i) liens
for current taxes not yet due and payable and (ii) possible minor Encumbrances
which do not in any case materially detract from the value of the property
<PAGE>
24
subject thereto or materially impair the operations of Liberty Digital and its
Subsidiaries, and which have not arisen other than in the ordinary course of
business. Liberty Digital and each of its Subsidiaries are in compliance with
all material terms of each material lease to which they are a party or are
otherwise bound. All material properties, equipment and systems of Liberty
Digital and its Subsidiaries are in good repair, working order and condition and
are in material compliance with all applicable standards and rules imposed (a)
by any governmental agency or authority in which such properties, equipment and
systems are located, and (b) under any agreements with customers.
SECTION 5.10 Intellectual Property. Liberty Digital and its Subsidiaries
---------------------
own or have a valid license to use all Intellectual Property used by them in the
conduct of their respective businesses, except where the failure to own or have
a valid right to use any such Intellectual Property would not, either
individually or in the aggregate, have a Material Adverse Effect with respect to
Liberty Digital. Neither Liberty Digital nor any of its Subsidiaries has
received any notice or other communication alleging that its usage of such
Intellectual Property violates the intellectual property rights of any other
person.
SECTION 5.11 Compliance with Law; Other Instruments. Neither Liberty
--------------------------------------
Digital nor any of its Subsidiaries is in violation or default of (i) the
Liberty Certificate or Liberty Bylaws or the organizational documents of any
Subsidiary or (ii) any Order or Law and has received no notice of, and to the
knowledge of Liberty Digital, no investigation or review is in process or
threatened by any governmental authority with respect to, any violation or
alleged violation of any Order or Law except, in the case of any Order or Law,
where such violation or default would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to Liberty Digital. The
execution, delivery and performance of this Agreement and the applicable
Registration Rights Agreement, and the consummation of the transactions
contemplated hereby (including the grant and any exercise of the Option) and
thereby, will not result in (i) any violation, or be in conflict with or
constitute a default (with or without notice or lapse of time or both) under the
Liberty Certificate or Liberty Bylaws or the organizational documents of any
Subsidiary, (ii) any violation, or be in conflict with or constitute a default
(with or without notice or lapse of time or both) under, any term or provision
of, or any right of termination, cancellation or acceleration arising under any
Material Contract, (iii) any violation under any Order or Law applicable to
Liberty Digital or any of its Subsidiaries, its business or operations or any of
its assets or properties or (iv) result in the imposition of any Encumbrance on
the business or material properties or assets of Liberty Digital or any of its
Subsidiaries, except, in the case of the foregoing clauses (ii), (iii) and (iv),
where such violation, default, investigation or review would not, either
individually or in the aggregate, have a Material Adverse Effect with respect to
Liberty Digital. The execution, delivery and performance of this Agreement and
the applicable Registration Rights Agreement do not, and the consummation of the
transactions contemplated hereby (including the grant of the Option and the any
exercise of the Option) and thereby will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority or any other person, and except where the
failure to obtain any such consent, approval, authorization or other action or
to make such filing or notification would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to Liberty Digital.
<PAGE>
25
SECTION 5.12 Litigation. Except as set forth in Liberty Digital's SEC
----------
Reports filed and publicly available prior to the date of this Agreement, there
is no Action pending, or to Liberty Digital's knowledge, currently threatened
against Liberty Digital or any Subsidiary which would, either individually or in
the aggregate, have a Material Adverse Effect with respect to Liberty Digital.
SECTION 5.13 Tax Matters. Except as set forth in a letter delivered to the
-----------
Company on or before April 5, 2000 and except for such matters as would not,
either individually or in the aggregate, have a Material Adverse Effect with
respect to Liberty Digital, (i) all material Tax Returns that are required to be
filed by or with respect to Liberty Digital and its Subsidiaries and each
affiliated group (within the meaning of Section 1504(a) of the Code) of which
they are members (an "Affiliated Group") have been duly filed with the
appropriate governmental agencies on or prior to the respective due dates
(including any extensions thereof) for such Tax Returns, (ii) all material Taxes
of Liberty Digital, its Subsidiaries and any Affiliated Group due and payable,
whether or not shown on the Tax Returns referred to in clause (i), have been
paid in full, (iii) the Tax Returns referred to in clause (i) have been audited
by the Internal Revenue Service or the appropriate state, local or foreign
taxing authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (iv) all material
deficiencies asserted or assessments made as a result of such examinations have
been paid in full, (v) no material issues that have been raised by the relevant
taxing authority in connection with the examination of any of the Tax Returns
referred to in clause (i) are currently pending, (vi) no waiver of statutes of
limitation have been given by or requested with respect to any Taxes of Liberty
Digital, its Subsidiaries or any Affiliated Group, (vii) there are no liens for
Taxes on any asset of Liberty Digital or any of its Subsidiaries other than for
current Taxes not yet due and payable, or if due, (A) not delinquent or (B)
being contested in good faith by appropriate proceedings and (viii) no consent
has been filed relating to Liberty Digital or any of its Subsidiaries pursuant
to Section 341(f) of the Code.
SECTION 5.14 Employees. Neither Liberty Digital nor any of its
---------
Subsidiaries has any collective bargaining agreements with any of its employees.
There is no labor union organizing activity pending or, to the knowledge of
Liberty Digital or any of its Subsidiaries, threatened with respect to Liberty
Digital or any of its Subsidiaries. Neither Liberty Digital nor any of its
Subsidiaries is aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with Liberty Digital or any of
its Subsidiaries, nor does Liberty Digital or any of its Subsidiaries have a
present intention to terminate the employment of any officer, key employee or
group of key employees, except that Liberty Digital has announced the closure of
its New York office. No employee of Liberty Digital or its Subsidiaries is bound
by any contract, agreement or covenant that would interfere or conflict with or
restrict in any way his or her full provision of services thereto, including any
of the foregoing relating to trade secrets, confidential information or other
Intellectual Property.
SECTION 5.15 Environmental and Safety Laws. (a) Except as would not,
-----------------------------
either individually or in the aggregate, have a Material Adverse Effect with
respect to Liberty Digital, neither Liberty Digital nor any of its Subsidiaries
has failed to comply in any material respect with any Environmental Laws.
<PAGE>
26
(b) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to Liberty Digital, neither Liberty Digital
nor any of its Subsidiaries has Released, generated or disposed of any Hazardous
Substance in a manner which could reasonably be expected to give rise to a
material liability under or relating to any Environmental Laws.
(c) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to Liberty Digital, there is no claim under
or relating to Environmental Laws pending or, to the knowledge of Liberty
Digital, threatened against Liberty Digital or any of its Subsidiaries or, to
the knowledge of Liberty Digital, pending or threatened against any other Person
whose liability for any environmental claim Liberty Digital or any of its
Subsidiaries has retained or assumed either contractually or by operation of
law. Except as would not reasonably be expected to give rise to a material
liability under or relating to any Environmental Laws, no real property
currently or formerly owned, operated or leased by Liberty Digital or any of its
Subsidiaries has been impacted by any Release or threatened Release of any
Hazardous Substance.
SECTION 5.16 Offering Valid. Assuming the accuracy of the representations
--------------
and warranties of the Company contained in Section 3.20 hereof, no registration
under the Securities Act of the LDIG Purchase Shares is required for the offer,
sale and issuance of the LDIG Purchase Shares as contemplated hereby.
SECTION 5.17 Permits. Liberty Digital and its Subsidiaries hold all
-------
Permits necessary for the lawful conduct of their respective businesses as they
are presently being conducted, except where the failure to so hold Permits would
not, either individually or in the aggregate, have a Material Adverse Effect
with respect to Liberty Digital. All Permits are in full force and effect in all
material respects. Liberty Digital and its Subsidiaries have complied in all
material respects with the terms of the Permits and there are no pending
modifications, amendments or revocations of any Permits. All fees due and
payable from Liberty Digital or any of its Subsidiaries to governmental
authorities or other third parties pursuant to the Permits have been paid. There
are no pending or, to the knowledge of Liberty Digital, threatened, suits,
actions, proceedings or, to Liberty Digital's knowledge, investigations with
respect to the possible revocation, cancellation, suspension, limitation or
nonrenewal of any Permits, and there has occurred no event which (whether with
notice or lapse of time or both) could reasonably be expected to result in or
constitute the basis for such a revocation, cancellation, suspension, limitation
or nonrenewal thereof.
SECTION 5.18 No Broker. Neither Liberty Digital nor any of its
---------
Subsidiaries has employed any broker or finder, or incurred any liability for
any brokerage or finders' fees or any similar fees or commissions in connection
with the transactions contemplated by this Agreement.
<PAGE>
27
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
SECTION 6.1 Access. (a) During the period from the date of this Agreement
------
until the earlier to occur of the Option Closing Date or the Option Expiration
Date, each of the Company and Liberty Digital shall, and shall cause its
Subsidiaries, officers, directors, employees, auditors and other agents to, (a)
afford the officers, employees, auditors and other agents of the other parties
hereto, during normal business hours reasonable access at all reasonable times
to its officers, employees, auditors, legal counsel, properties, offices, plants
and other facilities and to all books and records, (b) furnish the other parties
with all financial, operating and other data and information as such party,
through its officers, employees or agents, may from time to time reasonably
request and (c) afford the other parties the opportunity to discuss its affairs,
finances and accounts (including, in the case of the Company, the affairs,
finances and accounts of PBV and of the Subsidiaries the assets of which are to
be covered (in whole of in part) by the License Agreement) with its officers on
a regular basis.
(b) Each of the parties hereto agrees that it shall keep all information
furnished to it pursuant to Section 6.1(a) or otherwise by any other party
hereto regarding such party's business or operations, and any analyses,
compilations, forecasts, and/or other documents prepared by the receiving party
containing or based in whole or in part on any such furnished information
(collectively, the "Information"), confidential and will not publicly disclose
-----------
any of the Information except (i) as may be consented to by the furnishing party
and (ii) as required by law, regulation or legal or judicial process; provided,
--------
that where such disclosure is required, the receiving party shall provide the
furnishing party with a reasonable opportunity to review the disclosure, to the
extent practicable before it is made, and to interpose its own objections to, or
seek to limit, the disclosure at its own expense. The Information does not
include any information which (i) is or becomes publicly available other than as
a result of a disclosure by any receiving party hereunder, (ii) is already in
any party's possession, provided that such information is not known by such
party to be subject to any legal or contractual obligation of confidentiality
owed to the furnishing party, (iii) is or becomes available to any receiving
party on a non-confidential basis from a source other than the furnishing party
(provided, that such source is not known by the receiving party to be subject to
--------
any legal or contractual obligation to the furnishing party to keep such
information confidential), or (iv) is independently developed by any party
hereto without violating any of its obligations under this Section 6.1.
SECTION 6.2 Efforts. (a) Each party hereto agrees to use commercially reasonable
-------
efforts to take any and all actions required in order to consummate the
transactions contemplated in this Agreement, the Warrant Agreement and the
applicable Registration Rights Agreement.
(b) Purchaser and the Company agree to use their reasonable best efforts
and to negotiate in good faith after the date hereof and prior to the Purchase
Closing Date to agree on the Warrant Agreement, with the terms set forth in
Exhibit B hereto and in form and substance reasonably satisfactory to each such
party.
<PAGE>
28
SECTION 6.3 Regulatory and Other Authorizations; Notices and Consents. (a)
---------------------------------------------------------
Each of the parties hereto shall promptly make any and all filings which they
are required to make under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), for the sale of the Shares, the Warrants, the
-------
Warrant Shares, the PBV Units and the LDIG Purchase Shares and agrees to furnish
the other parties hereto with such necessary information and reasonable
assistance as such party may reasonably request in connection with the
preparation of any necessary filings or submissions to the Federal Trade
Commission ("FTC") or the Antitrust Division of the U.S. Department of Justice
---
(the "Antitrust Division"), including any filings or notices necessary under the
------------------
HSR Act. Any such actions with respect to the exercise of the Option shall be
taken by the Company at such times as Liberty Digital reasonably shall so
request. Each of the parties hereto shall, at its own expense, use all
reasonable efforts to respond to any request for additional information, or
other formal or informal request for information, witnesses or documents which
may be made by any governmental authority pertaining to it with respect to the
sale of the Shares, the Warrants, the Warrant Shares, the PBV Units and the LDIG
Purchase Shares and shall keep the other parties hereto fully apprised of its
actions with respect thereto.
(b) Each of the parties hereto shall use their commercially reasonable
efforts to give such notices and obtain all other authorizations, consents,
orders and approvals of all governmental authorities and other third parties
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement, the Warrant
Agreement, the Option and the applicable Registration Rights Agreement and will
cooperate fully with the other parties hereto in promptly seeking to obtain all
such authorizations, consents, orders and approvals. Notwithstanding the
foregoing, no party nor any of its Affiliates shall be required to dispose of
any assets, or agree to any material limitations on any of its operations, as a
condition to obtaining any such authorization, consent, order or approval.
SECTION 6.4 Transfer Restrictions. (a) The Shares. Purchaser agrees that
---------------------
it shall not, without the prior written consent of the Company, directly or
indirectly sell, transfer, assign, pledge, encumber, hypothecate or similarly
dispose of, either voluntarily or involuntarily, or enter into any contract,
option or other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition of
("Transfer"), any of the Shares at any time prior to the first anniversary of
--------
the Purchase Closing Date, other than (x) to a Subsidiary of Purchaser (a
"Purchaser Permitted Transferee"); provided, that (i) the Purchaser Permitted
------------------------------ --------
Transferee must agree in writing to be bound by the terms of this Agreement and
the applicable Registration Rights Agreement, and (ii) such a Transfer shall not
relieve Purchaser of any of its liabilities or obligations hereunder, and (y) a
pledge of the Shares, in whole or in part, by Purchaser or such Purchaser
Permitted Transferee to secure bona fide indebtedness; provided, that the
--------
pledgee agrees with the Company to be bound hereby in the event of a foreclosure
with the same effect as if it were named herein in lieu of Purchaser and no such
pledge shall relieve Purchaser of any of its liabilities or obligations
hereunder.
(b) The Warrants and the Warrant Shares. Purchaser agrees that it shall
not, without the prior written consent of the Company, directly or indirectly
Transfer any of the Warrants or the Warrant Shares at any time prior to the
first anniversary of the Purchase Closing
<PAGE>
29
Date, other than (x) to a Purchaser Permitted Transferee; provided, that (i) the
--------
Purchaser Permitted Transferee must agree in writing to be bound by the terms of
this Agreement, the Warrant Agreement and the applicable Registration Rights
Agreement, and (ii) such a Transfer shall not relieve Purchaser of any of its
liabilities or obligations hereunder, and (y) a pledge of the Warrant or the
Warrant Shares, in whole or in part, by Purchaser or such Purchaser Permitted
Transferee to secure bona fide indebtedness; provided, that the pledgee agrees
--------
with the Company to be bound hereby in the event of a foreclosure with the same
effect as if it were named herein in lieu of Purchaser and no such pledge shall
relieve Purchaser of any of its liabilities or obligations hereunder.
(c) The LDIG Purchase Shares. The Company agrees that it shall not,
without the prior written consent of Liberty Digital, directly or indirectly
Transfer any of the LDIG Purchase Shares at any time prior to the first
anniversary of the Purchase Closing Date, other than (x) to a Subsidiary of the
Company (a "Company Permitted Transferee"); provided, that (i) the Company
---------------------------- --------
Permitted Transferee must agree in writing to be bound by the terms of this
Agreement and the applicable Registration Rights Agreement, and (ii) such a
Transfer shall not relieve the Company of any of its liabilities or obligations
hereunder, and (y) a pledge of the LDIG Purchase Shares, in whole or in part, by
the Company or such Company Permitted Transferee to secure bona fide
indebtedness; provided, that the pledgee agrees with Liberty to be bound hereby
--------
in the event of a foreclosure with the same effect as if it were named herein in
lieu of the Company and no such pledge shall relieve the Company of any of its
liabilities or obligations hereunder.
(d) The PBV Units. Purchaser agrees that, in the event that Purchaser
acquires the PBV Units, it shall not, without the prior written consent of PBV,
Transfer any of the PBV Units at any time prior to the first anniversary of the
Option Closing Date, other than (x) to a Subsidiary of Purchaser (a "Purchaser
---------
Permitted Transferee"); provided, that (i) the Purchaser Permitted Transferee
- -------------------- --------
must agree in writing to be bound by the terms of this Agreement and the
applicable Registration Rights Agreement, and (ii) such a Transfer shall not
relieve Purchaser of any of its liabilities or obligations hereunder, and (y) a
pledge of the Shares, in whole or in part, by Purchaser or such Purchaser
Permitted Transferee to secure bona fide indebtedness; provided, that the
--------
pledgee agrees with PBV to be bound hereby in the event of a foreclosure with
the same effect as if it were named herein in lieu of Purchaser and no such
pledge shall relieve Purchaser of any of its liabilities or obligations
hereunder.
(e) The LDIG Shares or Liberty Media Shares. The Company agrees that, in
the event that the Company acquires the LDIG Shares or the Liberty Media Shares,
it shall not, without the prior written consent of Purchaser, Transfer any of
such shares at any time prior to the first anniversary of the Option Closing
Date, other than (x) to a Company Permitted Transferee; provided, that (i) the
--------
Company Permitted Transferee must agree in writing to be bound by the terms of
this Agreement and the applicable Registration Rights Agreement, and (ii) such a
Transfer shall not relieve the Company of any of its liabilities or obligations
hereunder, and (y) a pledge of the Shares, in whole or in part, by the Company
or such Company Permitted Transferee to secure bona fide indebtedness; provided,
--------
that the pledgee agrees with Purchaser to be bound hereby in the event of a
foreclosure with the same effect as if it were named herein in
<PAGE>
30
lieu of the Company and no such pledge shall relieve the Company of any of its
liabilities or obligations hereunder.
(f) Legend. Upon original issuance thereof and until such time as the same
is no longer required by the applicable requirements of the Securities Act,
certificates representing the Shares, the Warrants, the Warrant Shares, the PBV
Units, the LDIG Purchase Shares, the LDIG Shares, the Liberty Media Shares, the
Post-Option PBV Units, the Post-Option LDIG Shares and the Post-Option Liberty
Media Shares (and all securities issued in exchange or substitution therefor)
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR WITH ANY STATE SECURITIES COMMISSIONER,
AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY
THE HOLDER IN THE ABSENCE OF A REGISTRATION
STATEMENT WHICH IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933 OR AN APPLICABLE EXCEPTION
THEREFROM. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER CONTAINED IN THE STOCK PURCHASE
AGREEMENT DATED AS OF MARCH 29, 2000, AMONG
PRIMEDIA INC., LIBERTY MEDIA CORPORATION, AND
LIBERTY DIGITAL, INC., A COPY OF WHICH IS ON FILE
WITH [PRIMEDIA INC.] [PRIMEDIA BROADBAND VIDEO,
LLC] [LIBERTY DIGITAL, INC.][AT&T CORP.]
SECTION 6.5 Registration Rights. (a) At the Purchase Closing, the Company
-------------------
and Purchaser shall enter into a Registration Rights Agreement and the Company
and Liberty Digital shall enter into a Registration Rights Agreement, each
substantially in the form attached as Exhibit A hereto. Prior to the Purchase
Closing, the parties agree to negotiate in good faith with respect to the
appropriate limits on the number of shares that can be included in a demand
registration with respect to the shares of Liberty Digital or PBV issued or
issuable hereunder in an effort to mitigate the impact of the potential adverse
affect such a registration could have on the volatility and market price of the
securities subject to each such agreement.
(b) At the Option Closing, (i) (x) if the Option Purchase Price is paid in
LDIG Shares, the Company and Liberty Digital shall enter into a Registration
Rights Agreement and (y) if the Option Purchase Price is paid in Liberty Media
Shares, Purchaser shall cause AT&T to enter into a Registration Rights Agreement
and (ii) PBV and Purchaser shall enter into a Registration Rights Agreement,
each substantially in the form attached as Exhibit A hereto.
SECTION 6.6 Further Strategic Relationships. The Company and Purchaser
-------------------------------
will jointly evaluate other strategic relationships in the broadband video area.
<PAGE>
31
SECTION 6.7 Adjustment to the Option Purchase Price or the Post-Option
----------------------------------------------------------
Purchase Price. The parties hereto agree that, if the price paid for each PBV
- --------------
Unit or Post-Option PBV Unit (in each case, appropriately adjusted to reflect
any recapitalization or reorganization of PBV undertaken in connection with an
initial public offering of PBV) (the per unit price paid by Liberty Digital for
the PBV Units or Post-Option PBV Units being herein referred to as the "Per
---
Share PBV Price") exceeds one-half of the gross per share or per unit price at
- ---------------
which an initial public offering of PBV is consummated (the "IPO Price"), then
---------
the Company shall remit to Purchaser within five business days after the closing
of the initial public offering of PBV, an amount equal to the product of (A) the
difference between (x) the Per Share PBV Price and (y) one-half the IPO Price,
multiplied by (B) the number of PBV Units or Post-Option PBV Units (in each
case, appropriately adjusted to reflect any recapitalization or reorganization
of PBV undertaken in connection with an initial public offering of PBV) (the
"Adjustment Value"). The payment of the Adjustment Value shall be made by the
----------------
Company, at its option, in either (i) cash or (ii) if the Option Purchase Price
or Post-Option Purchase Price was paid with shares of LDIG Common Stock or
Liberty Media Common Stock, by delivery of a certificate or certificates
evidencing the number of shares of LDIG Common Stock or Liberty Media Common
Stock, free and clear of any Encumbrances (other than those (x) imposed by
federal or state securities laws or (y) placed thereon by or on behalf of
Purchaser), equal to the quotient (rounded to the nearest whole number) derived
by dividing the Adjustment Value by the Average Market Price of a share of LDIG
Common Stock or Liberty Media Common Stock, as applicable, that was used to
determine the number of LDIG Shares or Post-Option LDIG Shares, as applicable,
or Liberty Media Shares or Post-Option Liberty Media Shares, as applicable, to
be delivered pursuant to Section 2.3(b)(i).
SECTION 6.8 Public Announcements. Neither Purchaser nor Liberty Digital,
--------------------
on the one hand, nor the Company, on the other hand, will issue any press
release or public statement with respect to the transactions contemplated by
this Agreement without the prior written consent of the other parties hereto,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with the NYSE or Nasdaq. In addition to the
foregoing, Purchaser, Liberty Digital and the Company will consult to the extent
reasonably practicable with each other before issuing, and provide each other
the opportunity to review and comment upon, any such press release or other
public statement. The parties agree that the initial press release or releases
to be issued by or on behalf of the parties with respect to the transactions
contemplated by this Agreement shall be mutually agreed upon prior to the
issuance thereof.
SECTION 6.9 Confidentiality. No party hereto shall publicly disclose, by
---------------
any means, the scope and nature of the registration rights which such party
enjoys pursuant to this Agreement and the applicable Registration Rights
Agreement, except as may be required by applicable law or court process. This
obligation of confidentiality shall last indefinitely, regardless of the
termination of this Agreement in accordance with Section 8.11 hereof.
SECTION 6.10 No-Solicitation. Each of the parties hereto agrees that,
---------------
during the period beginning on the date hereof and ending on the second
anniversary of the Purchase Closing Date, it will not, directly or indirectly,
without the prior written consent of the
<PAGE>
32
appropriate party, (i) hire or enter into any services contract with any current
officer, director or employee of any other party or any of such party's
Subsidiaries, or (ii) induce or attempt to induce or otherwise counsel or
encourage any current officer, director or employee of any other party or any of
such party's Subsidiaries with whom such party has had contact in the course of
its consideration of the transactions contemplated hereby to leave or otherwise
terminate such person's relationship with his or her current employer; provided,
--------
however, that the foregoing shall not (x) prohibit any such actions pursuant to
a general employment advertisement published in a newspaper or other publication
of general circulation, (y) prevent any party from hiring any such person who
contacts it on his or her own initiative without any solicitation by or
encouragement from such party or (z) prevent any party from hiring any such
person who has been terminated by any other party or any of such party's
Subsidiaries prior to the commencement of employment discussions.
SECTION 6.11 Formation of PBV; IPO. (a) The parties agree that the assets
---------------------
of PBV shall include a licensing agreement (the "Licensing Agreement"),
-------------------
containing commercially reasonable terms, pursuant to which PBV shall have a
non-exclusive license to utilize any and all consumer video and other assets
(whether in print or any other medium), whether currently in existence or
hereafter developed or acquired, of the Company and its Subsidiaries (the
"Licensed Assets") for the development, promotion, distribution, sale or other
---------------
exploitation of consumer-oriented broadband video, interactive video and
streaming video products and services; provided, however, such assets shall not
-------- -------
include the educational video assets of the Company or its Subsidiaries,
including those of Channel One Corporation and Films for the Humanities and
Sciences, unless the Company, in its sole discretion, elects to include such
educational video assets. The exploitation of the Licensed Assets will not
extend to services that have traditionally been delivered by television, cable
and satellite television program services or to traditional videocassettes or
similar medium. "Commercially reasonable terms" means terms, including
royalties, that are no less favorable to PBV than those that could be obtained
in an arm's length negotiations with unrelated third parties who are not
Affiliates of the Company.
(b) Commencing on the date hereof, the parties shall use their good faith
and commercially reasonable efforts to, as promptly as reasonably practicable,
(i) identify the assets of the Company and its Subsidiaries that are to be
licensed to PBV pursuant to the License Agreement, (ii) determine the terms of
the License Agreement and (iii) agree on the fair market value of the PBV Units
for purposes of Section 1.3.
(c) If the Option is exercised, then the Company shall use its
commercially reasonable efforts (x) to cause the business of PBV to be conducted
in a manner that will permit PBV to effect an underwritten public offering (an
"IPO") within eighteen (18) months of the Option Closing Date and, (y) subject
---
to market conditions, to cause PBV to effect an IPO within such eighteen month
period and if the Option is not exercised, then the Company shall use its
commercially reasonable efforts to cause the business of PBV to be conducted in
a manner that will permit PBV to effect an IPO within eighteen (18) months of
the Option Expiration Date and, subject to market conditions, to cause PBV to
effect and IPO within such eighteen month period. Purchaser and Liberty Digital
will cooperate with the efforts of the Company and PBV to effect an IPO,
including with respect to any recapitalization or reorganization in connection
therewith;
<PAGE>
33
provided, that (i) such IPO consist of a primary offering of not less than 5% of
- --------
the total equity of PBV, (ii) the underwriters are reasonably satisfactory to
the party that has exercised the Option or the Post-Option, and (iii) the
valuation of PBV that is used to determine the initial public offering price is
recommended by the lead managing underwriter(s).
SECTION 6.12 Listing of Shares in PBV. In the event that the Option or the
------------------------
Post-Option is exercised, following an IPO, the Company shall use its
commercially reasonable efforts to cause PBV to have the PBV Units or
Post-Option PBV Units, as the case may be, listed on any nationally recognized
securities exchange or national quotation service on which the outstanding
membership units or shares of PBV are then listed.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
SECTION 7.1 Purchase Closing Conditions.
---------------------------
(a) Obligations of Purchaser. Purchaser's obligation to purchase the
------------------------
Shares at the Purchase Closing is subject to the satisfaction (or waiver by
Purchaser), on or prior to such Closing, of the following conditions:
(i) Representations and Warranties True; Performance of Obligations.
---------------------------------------------------------------
Each of the representations and warranties of the Company contained in
this Agreement that is qualified as to materiality or Material Adverse
Effect shall be true and correct, and each of the representations and
warranties of the Company contained in this Agreement that is not so
qualified as to materiality or Material Adverse Effect shall be true and
correct in all material respects, in each case as of the Purchase Closing
Date (except for those representations and warranties which address
matters only as of a particular date, which shall be true and correct, or
true and correct in all material respects, as the case may be, as of such
date). The Company shall have performed in all material respects all
agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Purchase Closing Date (it
being understood that the covenants relating to PBV and its assets shall
be deemed to not be required to be performed or observed by the Company on
or prior to the Purchase Closing Date).
(ii) Legal Investment. On the Purchase Closing Date, there shall not
----------------
be in effect any Law or Order directing that the purchase and sale of the
Shares and the other transactions contemplated by this Agreement, the
Warrant Agreement and the applicable Registration Rights Agreement not be
consummated or which has the effect of rendering it unlawful to consummate
such transactions.
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay (x) the purchase and sale of the Shares, the
Warrants, the PBV Units or the LDIG Shares or (y)
<PAGE>
34
the other transactions contemplated by this Agreement, the Warrant
Agreement and the applicable Registration Rights Agreement.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(v) Compliance Certificate; Secretary's Certificate. The Company
-----------------------------------------------
shall have delivered to Purchaser a compliance certificate, executed by
the Chief Executive Officer or the President of the Company, dated as of
the Purchase Closing Date, to the effect that the conditions specified in
Section 7.1(a)(i) have been satisfied. The Company shall have delivered to
Purchaser a certificate executed by the Secretary of the Company, dated as
of the Purchase Closing Date, certifying as to (x) the resolutions of the
Board evidencing approval of the transactions contemplated by this
Agreement, the Warrant Agreement and the applicable Registration Rights
Agreement and the authorization of the named officer or officers to
execute and deliver this Agreement, the Warrant Agreement and the
applicable Registration Rights Agreement and (y) certain of the officers
of the Company, their titles and examples of their signatures.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the Shares and the Warrants under the HSR Act shall have been
terminated or expired.
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by the Company and delivered to
Purchaser.
(viii) Listing of Shares. The Shares shall have been approved for
-----------------
listing on the NYSE, subject to official notice of issuance.
(ix) Satisfaction of Other Conditions. All of the conditions set
--------------------------------
forth in Sections 7.1(c) (other than clause (viii)) and 7.1(d) (other than
clause (ix)) hereof shall have been satisfied (or waived by the
appropriate party).
(b) Conditions to Obligations of the Company. The Company's obligation to
----------------------------------------
issue and sell the Shares at the Purchase Closing is subject to the satisfaction
(or waiver by the Company), on or prior to such Closing, of the following
conditions:
(i) Representations and Warranties of Purchaser True;
-------------------------------------------------
Performance of Obligations. Each of the representations and warranties of
--------------------------
Purchaser contained in this Agreement shall be true and correct in all
material respects as of the Purchase Closing Date. Purchaser shall have
performed in all material respects all agreements, obligations, covenants
and conditions herein required to be performed or observed by it on or
prior to the Purchase Closing Date.
(ii) Legal Investment. On the Purchase Closing Date, there shall
----------------
not be in effect any Law or Order directing that the purchase and sale
of the Shares and the other
<PAGE>
35
transactions contemplated by this Agreement, the Warrant Agreement and the
applicable Registration Rights Agreement not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.
(iii) Proceedings and Litigation. No Action shall have
--------------------------
been commenced by any governmental authority against any party hereto
seeking to restrain or delay (x) the purchase and sale of the Shares, the
Warrants, the PBV Units or the LDIG Shares or (y) the other transactions
contemplated by this Agreement, the Warrant Agreement and the applicable
Registration Rights Agreement.
(iv) Approvals. All approvals, consents, permits and
---------
waivers of governmental authorities necessary or appropriate for
consummation of the transactions contemplated by this Agreement shall have
been obtained.
(v) Purchaser's Compliance Certificate; Secretary's Certificate.
-----------------------------------------------------------
Purchaser shall have delivered to the Company a compliance certificate,
executed by the Chief Executive Officer or the President of Purchaser,
dated as of the Purchase Closing Date, to the effect that the conditions
specified in Section 7.1(b)(i) have been satisfied. Purchaser shall have
delivered to the Company a certificate executed by the Secretary of
Purchaser, dated as of the Purchase Closing Date, certifying as to (x) the
resolutions of the Board evidencing approval of the transactions
contemplated by this Agreement, the Warrant Agreement and the applicable
Registration Rights Agreement and the authorization of the named officer
or officers to execute and deliver this Agreement and the applicable
Registration Rights Agreement and (y) certain of the officers of
Purchaser, their titles and examples of their signatures.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the Shares and the Warrants under the HSR Act shall have been
terminated or expired.
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by Purchaser and delivered to
the Company.
(viii) Satisfaction of Other Conditions. All of the conditions set
--------------------------------
forth in Sections 7.1(c) (other than clause viii)) and 7.1(d) (other than
clause (ix)) hereof shall have been satisfied (or waived by the
appropriate party).
(c) Obligations of Liberty Digital. Liberty Digital's obligation to
------------------------------
issue and sell the LDIG Purchase Shares at the Purchase Closing is subject to
the satisfaction (or waiver by Liberty Digital), on or prior to such Closing, of
the following conditions:
(i) Representations and Warranties of the Company True; Performance
---------------------------------------------------------------
of Obligations. Each of the representations and warranties of the Company
--------------
contained in Sections 3.4, 3.11, 3.12., 3.18 and 3.20 of this Agreement
that is qualified as to materiality or Material Adverse Effect shall be
true and correct, and each of the representations and warranties of the
Company contained in such sections that is not so
<PAGE>
36
qualified as to materiality or Material Adverse Effect shall be true and
correct in all material respects, in each case as of the Purchase Closing
Date (except for those representations and warranties which address
matters only as of a particular date, which shall be true and correct, or
true and correct in all material respects, as the case may be, as of such
date). The Company shall have performed in all material respects all
agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Purchase Closing Date.
(ii) Legal Investment. On the Purchase Closing Date, there shall
----------------
not be in effect any Law or Order directing that the purchase and sale of
the LDIG Purchase Shares and the other transactions contemplated by this
Agreement and the applicable Registration Rights Agreement not be
consummated or which has the effect of rendering it unlawful to consummate
such transactions .
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay (x) the purchase and sale of the LDIG Purchase
Shares, (y) the other transactions contemplated by this Agreement and the
applicable Registration Rights Agreement.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(v) Compliance Certificate; Secretary's Certificate. The Company
-----------------------------------------------
shall have delivered to Liberty Digital a compliance certificate, executed
by the Chief Executive Officer or the President of the Company, dated as
of the Purchase Closing Date, to the effect that the conditions specified
in Section 7.1(c)(i) have been satisfied. The Company shall have delivered
to Liberty Digital a certificate executed by the Secretary of the Company,
dated as of the Purchase Closing Date, certifying as to (x) the
resolutions of the Board evidencing approval of the transactions
contemplated by this Agreement and the applicable Registration Rights
Agreement and the authorization of the named officer or officers to
execute and deliver this Agreement and the applicable Registration Rights
Agreement and (y) certain of the officers of the Company, their titles and
examples of their signatures.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the LDIG Purchase Shares under the HSR Act shall have been terminated
or expired.
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by the Company and delivered to
Liberty Digital.
(viii) Satisfaction of Other Conditions. All of the conditions set
--------------------------------
forth in Sections 7.1(a) (other than clause (ix)) and 7.1(b) (other than
clause (viii)) hereof shall have been satisfied (or waived by the
appropriate party).
<PAGE>
37
(d) Conditions to Obligations of the Company. The Company's obligation to
----------------------------------------
purchase the LDIG Purchase Shares at the Purchase Closing is subject to the
satisfaction (or waiver by the Company), on or prior to such Closing, of the
following conditions:
(i) Representations and Warranties True; Performance of Obligations.
--------------------------------------------------------------
Each of the representations and warranties of Liberty Digital contained in
this Agreement that is qualified as to materiality or Material Adverse
Effect shall be true and correct, and each of the representations and
warranties of Liberty Digital contained in this Agreement that is not so
qualified as to materiality or Material Adverse Effect shall be true and
correct in all material respects, in each case as of the Purchase Closing
Date (except for those representations and warranties which address
matters only as of a particular date, which shall be true and correct, or
true and correct in all material respects, as the case may be, as of such
date). Liberty Digital shall have performed in all material respects all
agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Purchase Closing Date.
(ii) Legal Investment. On the Purchase Closing Date, there shall not
----------------
be in effect any Law or Order directing that the purchase and sale of the
LDIG Purchase Shares and the other transactions contemplated by this
Agreement and the applicable Registration Rights Agreement not be
consummated or which has the effect of rendering it unlawful to consummate
such transactions.
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay (x) the purchase and sale of the LDIG Purchase
Shares, or (y) the other transactions contemplated by this Agreement and
the applicable Registration Rights Agreement.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(v) Purchaser's Compliance Certificate; Secretary's Certificate.
-----------------------------------------------------------
Liberty Digital shall have delivered to the Company a compliance
certificate, executed by the Chief Executive Officer or the President of
Liberty Digital, dated as of the Purchase Closing Date, to the effect that
the conditions specified in Section 7.1(d)(i) have been satisfied. Liberty
Digital shall have delivered to the Company a certificate executed by the
Secretary of Liberty Digital, dated as of the Purchase Closing Date,
certifying as to (x) the resolutions of the Board evidencing approval of
the transactions contemplated by this Agreement and the applicable
Registration Rights Agreement and the authorization of the named officer
or officers to execute and deliver this Agreement and the applicable
Registration Rights Agreement and (y) certain of the officers of Liberty
Digital, their titles and examples of their signatures.
(vi) HSR Compliance. All waiting periods applicable to the purchase of
--------------
the LDIG Purchase Shares under the HSR Act shall have been terminated or
expired.
<PAGE>
38
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by Liberty Digital and
delivered to the Company.
(viii) Listing of Shares. All of the LDIG Purchase Shares shall have
-----------------
been approved for quotation on Nasdaq, subject to official notice of
issuance.
(ix) Satisfaction of Other Conditions. The conditions set forth in
--------------------------------
Sections 7.1(a)(other than clause (ix)) and 7.1(b) (other than clause
(viii)) hereof shall have been satisfied (or waived by the appropriate
party).
SECTION 7.2 Option Closing Conditions.
-------------------------
(a) Obligations of Purchaser. Purchaser's obligation to purchase the PBV
------------------------
Units at the Option Closing is subject to the satisfaction (or waiver by
Purchaser), on or prior to such Closing, of the following conditions:
(i) Representations and Warranties True; Performance of Obligations.
---------------------------------------------------------------
Each of the representations and warranties of the Company contained in the
Company Certificate that is qualified as to materiality or Material
Adverse Effect shall be true and correct, and each of the representations
and warranties of the Company contained in the Company Certificate that is
not so qualified as to materiality or Material Adverse Effect shall be
true and correct in all material respects, in each case as of the Option
Closing Date (except for those representations and warranties which
address matters only as of a particular date, which shall be true and
correct, or true and correct in all material respects, as the case may be,
as of such date). The Company shall have performed in all material
respects all agreements, obligations, covenants and conditions herein
required to be performed or observed by it on or prior to the Option
Closing Date.
(ii) Legal Investment. On the Option Closing Date, there shall not
----------------
be in effect any Law or Order directing that the purchase and sale of the
PBV Units, in exchange for, if applicable, the LDIG Shares or Liberty
Media Shares, not be consummated or which has the effect of rendering it
unlawful to consummate such transaction.
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay the purchase and sale of the PBV Units in exchange
for, if applicable, the LDIG Shares or the Liberty Media Shares.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
sale of the PBV Units in exchange for, if applicable, the LDIG Shares or
the Liberty Media Shares shall have been obtained.
(v) Compliance Certificate. The Company shall have delivered to
----------------------
Purchaser a compliance certificate, executed by the Chief Executive
Officer or the President of the
<PAGE>
39
Company, dated as of the Option Closing Date, to the effect that the
conditions specified in Section 7.2(a)(i) have been satisfied.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the PBV Units and, if applicable, the acquisition in exchange therefor
of the LDIG Shares or Liberty Media Shares, under the HSR Act shall have
been terminated or expired.
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by PBV and delivered to
Purchaser or Liberty Digital.
(b) Conditions to Obligations of the Company. The Company's obligation to
issue and sell the PBV Units and to purchase the LDIG Shares at the Option
Closing is subject to the satisfaction (or waiver by the Company), on or prior
to such Closing, of the following conditions:
(i) Representations and Warranties True; Performance of Obligations.
---------------------------------------------------------------
Each of the representations and warranties of Purchaser or Liberty Digital
contained in the Liberty Certificate or AT&T contained in the AT&T
Certificate, as the case may be, that is qualified as to materiality or
Material Adverse Effect shall be true and correct, and each of the
representations and warranties of Purchaser, Liberty Digital or AT&T
contained in the Liberty Certificate or the AT&T Certificate, as
applicable, that is not so qualified as to materiality or Material Adverse
Effect shall be true and correct in all material respects, in each case as
of the Option Closing Date (except for those representations and
warranties which address matters only as of a particular date, which shall
be true and correct, or true and correct in all material respects, as the
case may be, as of such date). Purchaser and Liberty Digital shall have
performed in all material respects all agreements, obligations, covenants
and conditions herein required to be performed or observed by it on or
prior to the Option Closing Date.
(ii) Legal Investment. On the Option Closing Date, there shall not
----------------
be in effect any Law or Order directing that the purchase and sale of the
PBV Units, in exchange for, if applicable, the LDIG Shares or Liberty
Media Shares, not be consummated or which has the effect of rendering it
unlawful to consummate such transaction.
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay the purchase and sale of the PBV Units in exchange
for, if applicable, the LDIG Shares or the Liberty Media Shares.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
sale of the PBV Units in exchange for, if applicable, the LDIG Shares or
the Liberty Media Shares shall have been obtained.
<PAGE>
40
(v) Compliance Certificate. Purchaser, Liberty Digital or AT&T, as
----------------------
applicable, shall have delivered to the Company a compliance certificate,
executed by the Chief Executive Officer or the President of such company,
dated as of the Option Closing Date, to the effect that the conditions
specified in Section 7.2(b)(i) have been satisfied.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the PBV Units and, if applicable, the acquisition in exchange therefor
of the LDIG Shares or Liberty Media Shares, under the HSR Act shall have
been terminated or expired.
(vii) Registration Rights Agreement. If the Option Purchaser Price
-----------------------------
is not paid in cash, the applicable Registration Rights Agreement shall
have been executed by Liberty Digital or AT&T and delivered to the
Company.
(viii) Listing of LDIG Shares. The LDIG Shares or the Liberty Media
----------------------
Shares, as the case may be, shall have been approved for quotation on
Nasdaq, subject to official notice of issuance.
ARTICLE VIII
MISCELLANEOUS
-------------
SECTION 8.1 Other Definitions. The following terms as used in this
-----------------
Agreement shall have the following meanings:
(a) "Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person.
(b) "Control" (including the terms "controlled by" and "under common
------- ------------- ------------
control with"), with respect to the relationship between or among two or more
- ------------
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.
(c) "Group" shall have the meaning assigned to it in Section 13(d)(3) of
-----
the Exchange Act.
(d) "Person" means any individual, corporation, limited liability company,
------
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivisions thereof or any Group comprised of two or more of the foregoing.
<PAGE>
41
SECTION 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial. This
-------------------------------------------------
Agreement shall be governed in all respects by the laws of the State of New
York. No suit, action or proceeding with respect to this Agreement may be
brought in any court or before any similar authority other than in a court of
competent jurisdiction in the State of New York. Each of the parties hereby
submits to the exclusive jurisdiction of such courts for the purpose of such
suit, proceeding or judgment. Each of the parties hereto hereby irrevocably
waives any right which it may have had to bring such an action in any other
court, domestic or foreign, or before any similar domestic or foreign authority.
Each of the parties hereto hereby irrevocably and unconditionally waives trial
by jury in any legal action or proceeding in relation to this Agreement and for
any counterclaim therein.
SECTION 8.3 Successors and Assigns; Assignment. Except as otherwise
----------------------------------
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, permitted assigns, heirs, executors and
administrators of the parties hereto. This Agreement may not be assigned without
the prior written consent of each other party.
SECTION 8.4 Entire Agreement; Supersedes Prior Agreement. This Agreement
--------------------------------------------
and the Exhibits hereto, the applicable Registration Rights Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
SECTION 8.5 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 8.6 Amendment and Waiver. This Agreement may be amended or
--------------------
modified, and the rights of the parties hereunder may only be waived, upon the
written consent of each party sought to be bound.
SECTION 8.7 Delays or Omissions. It is agreed that no delay or omission to
-------------------
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the applicable
Registration Rights Agreement, shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any party's part
of any breach, default or noncompliance under this Agreement or the applicable
Registration Rights Agreement or any waiver on such party's part of any
provisions or conditions of this Agreement or the applicable Registration Rights
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or the applicable Registration Rights Agreement, by law, or otherwise
afforded to any party, shall be cumulative and not alternative.
<PAGE>
42
SECTION 8.8 Notices. All notices required or permitted hereunder shall be
-------
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) business day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the addresses set forth below:
If to the Company:
PRIMEDIA, Inc.
745 Fifth Avenue
23rd Floor
New York, NY 10151
Telephone: (212) 745-0100
Fax: (212) 745-0199
Attn: Beverly C. Chell, Esq.
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telephone: (212) 455-2000
Fax: (212) 455-2502
Attn: Marni J. Lerner, Esq.
If to Purchaser or Liberty Digital:
Liberty Media Group
9197 South Peoria Street
Engelwood, Colorado 80112
Telephone: (720) 875-5400
Fax: (720) 875-5382
Attn: Charles Tanabe, Esq.
Liberty Digital, Inc.
12312 West Olympic Boulevard
Los Angeles, CA 90064
Telephone: (310) 979-5006
Fax: (310) 979-5003
Attn: Craig Enenstein
<PAGE>
43
with copies to:
Baker Botts LLP
599 Lexington Avenue
New York, NY 10012
Telephone: (212) 705-5000
Fax: (212) 705-5125
Attn: Robert W. Murray Jr., Esq.
SECTION 8.9 Expenses. Each party hereto shall pay all costs and expenses
--------
that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement, the Warrant Agreement and the applicable
Registration Rights Agreement.
SECTION 8.10 Titles and Subtitles. The titles of the sections and
--------------------
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
SECTION 8.11 Termination. This Agreement may be terminated by (i) mutual
-----------
agreement of the parties hereto or (ii) by Purchaser or the Company in the event
the Purchase Closing has not occurred by August 1, 2000; provided, that this
--------
termination right may not be exercised by a party whose nonperformance has
delayed the Purchase Closing. Upon termination of this Agreement pursuant to
this Section 8.11, this Agreement shall be void and of no further force and
effect and no party shall have any liability to any other party under this
Agreement, except that nothing herein shall relieve any party from any liability
for the breach of any of the representations, warranties, covenants and
agreements set forth in this Agreement and except as contemplated by Section
8.9.
SECTION 8.12 Counterparts; Execution by Facsimile Signature. This
----------------------------------------------
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument. This
Agreement may be executed by facsimile signature(s).
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this STOCK PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
PRIMEDIA INC.
By: ________________________________
Name:
Title:
LIBERTY MEDIA CORPORATION
By: ________________________________
Name:
Title:
LIBERTY DIGITAL, INC.
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT 7(d)
================================================================================
WARRANT AGREEMENT
between
PRIMEDIA INC.
and
LIBERTY PRIME, INC.
Dated as of April 19, 2000
================================================================================
<PAGE>
This WARRANT AGREEMENT (the "Agreement") is entered into as of April 19,
---------
2000, between PRIMEDIA INC., a Delaware corporation (the "Company"), and LIBERTY
-------
PRIME, INC., a Delaware corporation ("Purchaser").
---------
WHEREAS, pursuant to the Stock Purchase Agreement, dated as of March 29,
2000, among the Company, Liberty Media Corporation, a Delaware corporation
("Liberty Media"), and Liberty Digital, Inc., a Delaware corporation and a
-------------
majority owned subsidiary of Liberty Media (the "Stock Purchase Agreement"), the
------------------------
Company has authorized the sale and issuance to Liberty Media or its designee of
warrants to purchase initially up to 1,500,000 shares of common stock, par value
$0.01 per share (the "Common Stock"), of the Company on the terms and subject to
------------
the conditions set forth herein.
WHEREAS, in accordance with the terms and conditions of the Stock Purchase
Agreement, Liberty Media has designated Purchaser as its designee to acquire the
Warrants.
WHEREAS, Purchaser desires to acquire the Warrants on the terms and
conditions set forth in the Stock Purchase Agreement and herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1.
Defined Terms
SECTION 1.1 Definitions. Capitalized terms used and not defined herein
-----------
shall have the meanings assigned to them in the Stock Purchase Agreement. As
used herein, the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person.
"Board" means the Board of Directors of the Company.
-----
"Business Day" means any day that is not a Saturday, a Sunday or other day
------------
on which banks are required or authorized by law to be closed in The City of New
York.
"control" (including the terms "controlled by" and "under common control
------- ------------- --------------------
with"), with respect to the relationship between or among two or more Persons,
- ----
means the possession, directly or indirectly, of the power to direct or cause
the direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
<PAGE>
2
"Exercise Price" means, at any date herein, the price at which a share of
--------------
Common Stock may be purchased pursuant to this Warrant on such date. On the date
of original issuance of this Warrant, the Exercise Price is $25.00 per share of
Common Stock.
"Expiration Date" means the third anniversary of the Purchase Closing
---------------
Date.
"Group" shall have the meaning assigned to it in Section 13(d)(3) of the
-----
Exchange Act.
"Holder" means the duly registered holder of this Warrant under the terms
------
hereof.
"Independent Investment Banking Firm" means an investment banking firm of
-----------------------------------
nationally recognized standing that is, in the reasonable judgment of the Person
engaging such firm, qualified to perform the task for which it has been engaged.
"Majority Holders" shall mean the Holders of Warrants exercisable for in
----------------
excess of 50% of the aggregate number of shares of Common Stock then purchasable
upon exercise of all of the Warrants then outstanding.
"Market Value" means, (a) with respect to capital stock or other equity
------------
securities, the last reported sales price on the date of determination or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices regular way for such day, in each case (i) on the principal
national securities exchange on which the shares of such capital stock or other
equity interest are listed or to which such shares are admitted for trading or
(ii) if such capital stock or other equity interest is not listed or admitted
for trading on a national securities exchange, in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. National Market
System ("Nasdaq") or any comparable system, or (iii) if such capital stock or
------
other equity interest is not listed on Nasdaq or a comparable system, as
furnished by two members of the National Association of Securities Dealers, Inc.
("NASD") selected from time to time in good faith by the Board for that purpose.
----
In the absence of all of the foregoing, or if for any other reason the Market
Value per share cannot be determined pursuant to the foregoing provisions or if
the consideration to be received by the holders of Common Stock consists of
evidences of indebtedness, other property, warrants, options or subscription of
purchase rights, the Market Value shall be the fair market value thereof as
determined by an Independent Investment Banking Firm selected by the Company and
reasonably acceptable to the Majority Holders. Subject to Section 4.10, the
Company shall bear the fees and expenses of any Independent Investment Banking
Firm involved in the determination of Market Value.
"Person" means any individual, corporation, limited liability company,
------
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivisions thereof or any Group comprised of two or more of the foregoing.
"SEC" means the U.S. Securities and Exchange Commission.
---
<PAGE>
3
"Securities Act" means the Securities Act of 1933, as amended.
--------------
ARTICLE 2.
Grant
-----
SECTION 2.1 The Company hereby grants to Purchaser warrants (the
"Warrants") which shall entitle the registered holder thereof to purchase from
--------
the Company, in accordance with the terms hereof, initially up to 1,500,000
shares (the "Warrant Shares") of Common Stock, subject to adjustment as provided
--------------
in Article 7, at the Exercise Price, subject to adjustment as provided in
Article 7, all subject to the terms and conditions set forth herein.
SECTION 2.2 Warrant Certificates. The Warrants shall be evidenced by
--------------------
certificates issued pursuant to this Agreement (the "Warrant Certificates") in
--------------------
the form set forth in Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement.
ARTICLE 3.
Exercise Terms
--------------
SECTION 3.1 Exercise Periods. At any time from and after the date of this
----------------
Agreement and until 12:00 a.m., New York City time, on the Expiration Date, the
Holder may exercise the Warrants, on any Business Day, for all or any part of
the Warrant Shares.
SECTION 3.2 Expiration. Each Warrant shall terminate and become void, and
----------
all rights thereunder and all rights in respect thereof under this Agreement
shall cease, as of the earlier of (i) 12:00 a.m., New York City time, on the
Expiration Date and (ii) the time and date such Warrant is exercised.
SECTION 3.3 Manner of Exercise. In order to exercise the Warrants, in
------------------
whole or in part, the Holder shall deliver to the Company at its principal
office at 745 Fifth Avenue, 23rd Floor, New York, NY 10151, or at the office or
agency designated by the Company pursuant to Article 7, (i) a Warrant
Certificate with the annexed Subscription Form duly executed and (ii) payment of
the Exercise Price for the number of Warrant Shares in respect of which such
Warrant(s) is then exercised. Payment of the Exercise Price shall be made in
cash, by certified or official bank check payable to the order of the Company or
by wire transfer of funds to an account designated by the Company for such
purpose. In the event that such a Warrant Certificate is surrendered for
exercise in respect of less than all the Warrant Shares purchasable on such
exercise at any time prior to the Expiration Date, the Company shall, at the
time of delivery of the certificate or certificates representing the Warrant
Shares, deliver to such Holder a new Warrant Certificate evidencing the rights
of such Holder to purchase the remaining number
<PAGE>
4
of Warrant Shares, which new Warrant Certificate shall in all other respects be
identical with the surrendered Warrant Certificate.
SECTION 3.4 Issuance of Warrant Shares. Subject to Section 3.5, upon the
--------------------------
surrender of a Warrant Certificate and payment of the per share Exercise Price
as set forth in Section 3.3, the Company shall, as promptly as practicable, and
in any event within five (5) Business Days thereafter, issue or cause there to
be issued and deliver or cause to be delivered to the Holder (i) a certificate
or certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrant Certificate or (ii) such other securities or property
to which the Holder is entitled, registered or otherwise to the Person or
Persons entitled to receive the same, together with cash as provided in Section
3.5 in respect of any fractional Warrant Shares otherwise issuable upon such
exercise. Such certificate or certificates shall be deemed to have been issued
and any Person so designated to be named therein shall be deemed to have become
a holder of record of such Warrant Shares as of the date of the delivery of the
Warrant Certificate (together with a duly executed Subscription Form) and
payment of the Exercise Price.
SECTION 3.5 Fractional Warrant Shares. The Company shall not be required
-------------------------
to issue fractional Warrant Shares on the exercise of the Warrants. If any
fraction of a Warrant Share would, except for the provisions of this Section
3.5, be issuable on the exercise of a Warrant (or specified portion thereof),
the Company shall pay an amount in cash equal to the Market Value for one
Warrant Share on the Business Day immediately preceding the date such Warrant is
exercised, multiplied by such fraction, computed to the nearest whole cent. For
purposes of determining the Market Value, if in accordance with such term, an
Independent Investment Banking Firm would be required to be hired to determine
the Market Value and but for this Section 3.5, an Independent Investment Banking
Firm is not otherwise required to be retained to determine Market Value at such
time, then Market Value shall be determined in good faith by the Board.
SECTION 3.6 Reservation of Warrant Shares. (a) The Company shall at all
-----------------------------
times on and following the Purchase Closing Date keep reserved out of its
authorized shares of Common Stock a number of shares of Common Stock sufficient
to provide for the exercise in full of all outstanding Warrants. The registrar
for the Common Stock shall at all times on and following the Purchase Closing
Date and until the Expiration Date, or the time at which all Warrants have been
exercised or canceled, reserve such number of authorized shares as shall be
required for such purpose. All Warrant Shares which may be issued upon exercise
of the Warrants shall be duly and validly authorized, validly issued, fully
paid, nonassessable, free of preemptive rights and free from all Encumbrances.
(b) Before taking any action which would cause an adjustment pursuant to
Article 4 to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
Exercise Price as so adjusted.
<PAGE>
5
SECTION 3.7 Compliance with Law. If any shares of Common Stock required to
-------------------
be reserved for purposes of exercise of the Warrants would require, under any
federal or state law or applicable governing rule or regulation of any national
securities exchange, Nasdaq or any comparable system, registration with or
approval of any governmental authority, or listing on any such national
securities exchange, Nasdaq or any comparable system before such shares may be
issued upon exercise, the Company will use its reasonable best efforts to cause
such shares to be duly registered or approved by such governmental authority or
listed on the relevant national securities exchange, Nasdaq or any comparable
system, at its expense.
ARTICLE 4.
Adjustment Provisions
---------------------
SECTION 4.1 Changes in Common Stock. In the event that at any time or from
-----------------------
time to time after the date hereof, the Company shall (i) pay a dividend or make
a distribution on its Common Stock in shares of its Common Stock or other shares
of its capital stock to all holders of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a larger number of shares of Common
Stock, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (iv) increase or decrease the number of
shares of Common Stock outstanding by reclassification of its Common Stock (in
each case, other than a transaction to which Section 4.4 is applicable), then
the number of shares of Common Stock purchasable upon exercise of the Warrants
immediately after the happening of such event shall be adjusted so that, after
giving effect to such adjustment, each Holder of the Warrants shall be entitled
to receive the number of shares of Common Stock (and other shares of capital
stock, if applicable) upon exercise that such Holder would have owned or have
been entitled to receive had the Warrants been exercised immediately prior to
the happening of the events described above (or, in the case of a dividend or
distribution of Common Stock or other shares of capital stock, immediately prior
to the record date therefor), and the Exercise Price shall be adjusted in
inverse proportion. An adjustment made pursuant to this Section 4.1 shall become
effective immediately after the effective date, retroactive to the record date
therefor in the case of a dividend or distribution in shares of Common Stock or
other shares of capital stock, and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
The adjustment contemplated by this Section 4.1 shall be made successively
whenever any event listed above shall occur.
SECTION 4.2 Cash Dividends and Certain Other Distributions. In case at any
----------------------------------------------
time or from time to time after the date hereof, the Company shall distribute to
all holders of Common Stock any dividend or other distribution of cash (other
than ordinary cash dividends, but including extraordinary cash dividends),
evidences of its indebtedness, shares of its capital stock or any other
properties or securities or (ii) any options, warrants or other rights to
subscribe for or purchase any of the foregoing (other than, in each case set
forth in (i) and (ii), (x) any dividend or distribution described in Section 4.1
or, (y) any rights, options, warrants or securities described in Section 4.3),
then (i) the number of shares of Common Stock purchasable upon the exercise of
the Warrants shall be increased to a number determined by multiplying the number
of
<PAGE>
6
shares of Common Stock purchasable upon the exercise of the Warrants immediately
prior to the record date for any such dividend or distribution by a fraction,
(A) the numerator of which shall be the Market Value per share of Common Stock
on the record date for such distribution, and (B) the denominator of which shall
be such Market Value per share of Common Stock less the sum of (x) any cash
distributed per share of Common Stock and (y) the fair value (the "Fair Value")
----------
(as determined in good faith by the Board, whose determination shall be
evidenced by a board resolution) of the portion, if any, of the distribution
applicable to one share of Common Stock consisting of evidences of indebtedness,
shares of stock, securities or other property and (ii) the Exercise Price shall
be adjusted to a number determined by dividing the Exercise Price immediately
prior to such record date by the above fraction. Such adjustments shall be made
successively whenever any distribution is made and shall become effective as of
the date of distribution, retroactive to the record date for any such
distribution; provided, however, that the Company is not required to make an
-------- -------
adjustment pursuant to this Section 4.2 (other than with respect to rights,
warrants or other subscription rights that expire by their terms prior to the
Expiration Date) if at the time of such distribution the Company sets aside for
the benefit of the Holders of Warrants the same distribution as it makes to
holders of Common Stock pro rata based on the number of shares of Common Stock
for which such Warrants are then exercisable.
SECTION 4.3 Rights Issue. In the event that at any time or from time to
------------
time after the date hereof, the Company shall issue, sell, distribute or
otherwise grant any rights to subscribe for or to purchase, or any options or
warrants for the purchase of, or any securities convertible or exchangeable
into, Common Stock to all holders of Common Stock, entitling such holders to
subscribe for or purchase shares of Common Stock or stock or securities
convertible into Common Stock, whether or not immediately exercisable,
convertible or exchangeable, as the case may be, and the subscription or
purchase price per share of Common Stock or the price per share of Common Stock
issuable upon exercise, conversion or exchange thereof is lower at the record
date for such issuance than the then Market Value per share of Common Stock, the
number of shares of Common Stock thereafter purchasable upon the exercise of the
Warrants shall be determined by multiplying the number of shares of Common Stock
purchasable upon the exercise of the Warrants prior to the record date by a
fraction, (A) the numerator of which shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options, warrants or
securities plus the maximum number of additional shares of Common Stock offered
for subscription or purchase or into or for which such securities are
convertible or exchangeable, and (B) the denominator of which shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights, options, warrants or securities plus the total number of shares of
Common Stock which could be purchased at the Market Value with the aggregate
consideration received through the issuance of such rights, warrants, options,
or convertible securities. In the event of any such adjustment, the Exercise
Price shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such date of issuance by the above fraction. Such
adjustment shall be made successively whenever such rights, options or warrants
are issued and shall become effective retroactively immediately after the record
date for the determination of stockholders entitled to receive such rights,
options, warrants or securities.
<PAGE>
7
If the Company at any time shall issue two or more securities as a unit
and one or more of such securities shall be rights, options or warrants for or
securities convertible or exchangeable into, Common Stock subject to this
Section 4.3, the consideration allocated to each such security shall be
determined in good faith by a Board resolution.
SECTION 4.4 Reorganization, Reclassification, Merger, Consolidation or
----------------------------------------------------------
Disposition of Assets. In case the Company shall reorganize its capital,
- ---------------------
reclassify its capital stock, consolidate or merge with or into another Person
(where the Company is not the surviving entity or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another Person and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring Person, or any cash, shares of stock
or other securities or property of any nature whatsoever (including warrants or
other subscription or purchase rights) in addition to or in lieu of common stock
of the successor or acquiring Person ("Other Property"), are to be received by
--------------
or distributed to the holders of Common Stock of the Company, then each Holder
shall have the right thereafter to receive, upon exercise of such Warrant, the
number of shares of common stock of the successor or acquiring Person or of the
Company, if it is the surviving entity, and Other Property receivable upon or as
a result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which such Warrant is exercisable immediately prior to such event (assuming, to
the extent applicable, that such holder failed to exercise any rights of
election with respect thereto and, in the case of a transaction in which
non-electing holders receive more than two types of consideration, assuming that
such holder received per share of Common Stock the kind and amount of shares of
common stock of the successor or acquiring person and/or Other Property received
by a plurality of the non-electing shares of Common Stock). In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring Person (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of the Warrants to be performed and observed by the
Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board) in order to provide for adjustments of shares of the common stock of the
successor or acquiring person for which this Warrant is exercisable (in addition
to any Other Property) which shall be as nearly equivalent as practicable to the
adjustments provided for in this Article 4 with respect to the Common Stock. For
purposes of this Section 4.4 "common stock of the successor or acquiring Person"
shall include stock of such Person of any class which is not preferred as to
dividends or assets over any other class of stock of such Person and which is
not subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 4.4 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or dispositions of assets.
<PAGE>
8
SECTION 4.5 Superseding Adjustment. Upon the expiration of any rights,
----------------------
options, warrants or conversion or exchange privileges which resulted in any
adjustments pursuant to this Article 4, if any thereof shall not have been
exercised, the number of Warrant Shares purchasable upon the exercise of each
Warrant shall be readjusted as if (A) the only shares of Common Stock issuable
upon exercise of such rights, options, warrants, conversion or exchange
privileges were the shares of Common Stock, if any, actually issued upon the
exercise of such rights, options, warrants or conversion or exchange privileges
and (B) shares of Common Stock actually issued, if any, were issuable for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange privileges whether or not exercised and the Exercise Price shall be
readjusted inversely; provided, however, that no such readjustment shall (except
-------- -------
by reason of an intervening adjustment under Section 4.1) have the effect of
decreasing the number of Warrant Shares purchasable upon the exercise of each
Warrant or increasing the Exercise Price by an amount in excess of the amount of
the adjustments to the number of Warrant Shares purchasable and the Exercise
Price initially made in respect of the issuance, sale or grant of such rights,
options, warrants or conversion or exchange privileges.
SECTION 4.6 Minimum Adjustment. The adjustments required by the preceding
------------------
Sections of this Article 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that no adjustment of the
Exercise Price or the number of shares of Common Stock purchasable upon exercise
of the Warrants that would otherwise be required shall be made (except in the
case of a subdivision or combination of shares of Common Stock, as provided for
in Section 4.1) unless and until such adjustment either by itself or with other
adjustments not previously made increases or decreases by at least 1% the
Exercise Price or the number of shares of Common Stock purchasable upon exercise
of the Warrants immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Article 4 and not previously made, would result in
a minimum adjustment. For the purpose of any adjustment, any specified event
shall be deemed to have occurred at the close of business on the date of its
occurrence. In computing adjustments under this Article 4, fractional interests
in Common Stock shall be taken into account to the nearest one-hundredth of a
share.
SECTION 4.7 Other Provisions Regarding Adjustments. In the event that at
--------------------------------------
any time, as a result of an adjustment made pursuant to Section 4.1 hereof, the
Holder of a Warrant shall become entitled to receive any shares of capital stock
of the Company other than shares of Common Stock, thereafter the number of such
other shares of capital stock so receivable upon exercise of such Warrant shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Article 4 and the provisions contained elsewhere herein with
respect to Common Stock shall apply on like terms to any such other shares.
<PAGE>
9
SECTION 4.8 Notice of Adjustment. Whenever the Exercise Price or the
--------------------
number of shares of Common Stock and other property, if any, purchasable upon
exercise of Warrants is adjusted, as herein provided, the Company shall deliver
to the Holders a certificate of a firm of independent accountants (who may be
the regular accountants employed by the Company) or the Chief Financial Officer
of the Company setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated (including a
description of the basis on which the Board determined the Market Value of any
evidences of indebtedness, other securities or property or warrants or other
subscription or purchase rights), and specifying the Exercise Price and the
number of shares of Common Stock purchasable upon exercise of the Warrants after
giving effect to such adjustment.
SECTION 4.9 Notice of Certain Transactions. In the event that the Company
------------------------------
shall resolve or agree (a) to pay any dividend payable in securities of any
class to the holders of its Common Stock or to make any other distribution to
the holders of its Common Stock, (b) to offer the holders of its Common Stock
rights to subscribe for or to purchase any securities convertible into shares of
Common Stock or shares of Common Stock or shares of stock of any class or any
other securities, rights or options, or (c) to effect any reclassification of
its Common Stock, capital reorganization, merger, consolidation or disposition
of all or substantially all of its assets, the Company shall within 5 days send
to the Holders, a notice of such proposed action or offer, such notice to be
mailed to the Holders, which shall specify the record date for the purposes of
such dividend, distribution or rights, or the date such issuance or event is to
take place and the date of participation therein by the holders of Common Stock,
if any such date is to be fixed, and shall briefly indicate the effect of such
action on the Common Stock and on the number and kind of any other shares of
stock and on other property, if any, and the number of shares of Common Stock
and other property, if any, purchasable upon exercise of each Warrant and the
Exercise Price after giving effect to any adjustment which will be required as a
result of such action. Such notice shall be given by the Company as promptly as
possible.
ARTICLE 5.
Transfer, Division and Combination
----------------------------------
SECTION 5.1 Transfer. Subject to compliance with Section 5.5, transfer of
the Warrants and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon surrender of
the Warrants at the principal office of the Company referred to in Section 3.3
or the office or agency designated by the Company pursuant to Article 7,
together with a written assignment of such Warrants substantially in the form of
Exhibit B hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to Section 5.5, execute and deliver a new Warrant Certificate or Warrant
Certificates in the name of the assignee or assignees and in the denomination
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant Certificate evidencing the portion of the Warrants not so assigned,
and the Warrant Certificate shall promptly be cancelled. A Warrant, if properly
assigned in
<PAGE>
10
compliance with Section 5.5, may be exercised by a new Holder for the purchase
of shares of Common Stock without having a new Warrant Certificate issued. If
requested by the Company, a new Holder shall acknowledge in writing, in form
reasonably satisfactory to the Company, such Holder's continuing obligations
under Section 5.5 and Article 9.
SECTION 5.2 Division and Combination. Subject to Section 5.5, a Warrant
------------------------
Certificate may be divided or combined with other Warrant Certificates upon
presentation hereof at the aforesaid office or agency of the Company, together
with a written notice specifying the names and denominations in which new
Warrant Certificates are to be issued, signed by Holder or its agent or
attorney. Subject to compliance with Section 5.1 and with Section 5.5, as to any
transfer which may be involved in such division or combination, the Company
shall execute and deliver a new Warrant Certificate or Warrants Certificates in
exchange for the Warrant Certificate or Warrants Certificates to be divided or
combined in accordance with such notice.
SECTION 5.3 Expenses. The Company shall prepare, issue and deliver at its
--------
own expense (other than transfer taxes) the new Warrant Certificate or Warrant
Certificates under this Article 5. The Company will pay all documentary stamp
taxes attributable to the initial issuance of the Warrants and of the Warrant
Shares upon the exercise of the Warrants; provided, however, that the Company
-------- -------
shall not be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issuance of any Warrant Certificates or any
certificates for Warrant Shares in a name other than that of the registered
Holder of such Warrant Certificate, and the Company shall not be required to
issue or deliver such Warrant Certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the reasonable satisfaction of the Company
that such tax has been paid.
SECTION 5.4 Maintenance of Books. The Company agrees to maintain, at its
--------------------
aforesaid office or agency, books for the registration or transfer of the
Warrants.
SECTION 5.5 Restriction on Transfer. (a) The Warrants and the Warrant
-----------------------
Shares issuable upon exercise hereof are subject in all respects to the terms
and conditions of the Stock Purchase Agreement. No transfer, sale, assignment,
hypothecation or other disposition of the Warrants or the Warrant Shares
issuable upon exercise hereof may be made except in accordance with the
provisions of the Stock Purchase Agreement (it being understood that any
transfer of Common Stock permitted under the provisions of the Stock Purchase
Agreement shall be a permitted transfer with respect to the Warrants and the
Warrant Shares). The Holder, by acceptance of a Warrant Certificate, agrees to
the bound by the applicable provisions of the Stock Purchase Agreement and all
applicable benefits of the Stock Purchase Agreement shall inure to such Holder.
(b) Each Holder of the Warrants, by acceptance thereof, represents and
acknowledges that the Warrants and the Warrant Shares which may be purchased
upon exercise of a Warrant have not been registered under the Securities Act or
under any state securities laws. Each Holder of the Warrants, by acceptance
thereof, represents and acknowledges that such Holder (i) is acquiring the
Warrants and the Warrant Shares for investment for its own account,
<PAGE>
11
not as a nominee or agent, and not with the view to, or for resale in connection
with, any distribution thereof, (ii) is an "accredited investor" within the
meaning of Regulation D, Rule 501(a), promulgated by the SEC, (iii) acknowledges
that the Warrants and the Warrant Shares must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from the
registration requirements of the Securities Act is available and (iv) represents
that by reason of its business or financial experience, such Holder has the
capacity to protect its own interests in connection with the transactions
contemplated by this Agreement. Neither the Warrants nor the Warrant Shares may
be transferred except (x) pursuant to an effective registration statement under
the Securities Act, (y) pursuant to Rule 144 under the Securities Act if the
transferor delivers a certificate, in form and substance reasonably satisfactory
to the Company, that such transfer complies with the requirements of Rule 144,
or (z) pursuant to any other available exemption from registration if such
transferee makes the representations set forth in the preceding sentence in
writing to the Company and, in the case of clause (z), with the delivery to the
Company of an opinion of counsel reasonably satisfactory to the Company by
counsel reasonably satisfactory to the Company stating that no registration is
required under the Securities Act; provided, however, that such opinion of
counsel shall not be required in connection with any transfer to a Subsidiary of
Purchaser.
(c) (i) Except as otherwise provided in this Section 5.5, each certificate
for Warrant Shares initially issued upon the exercise of a Warrant, and each
certificate for Warrant Shares issued to any transferee of any such certificate,
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR WITH ANY
STATE SECURITIES COMMISSIONER, AND MAY NOT BE
TRANSFERRED OR DISPOSED OF BY THE HOLDER IN THE ABSENCE
OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933 OR AN APPLICABLE EXEMPTION
THEREFROM. THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN THE
STOCK PURCHASE AGREEMENT DATED AS OF MARCH 29, 2000,
AMONG PRIMEDIA INC., LIBERTY MEDIA CORPORATION AND
LIBERTY DIGITAL, INC., A COPY OF WHICH IS ON FILE WITH THE
COMPANY."
(ii) Except as otherwise provided in this Section 5.5, each Warrant shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR WITH ANY STATE SECURITIES COMMISSIONER, AND
MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR LAWS,
THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS
OF THIS WARRANT.
<PAGE>
12
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED
IN THE STOCK PURCHASE AGREEMENT DATED AS OF MARCH 29,
2000, AMONG PRIMEDIA INC, LIBERTY MEDIA CORPORATION AND
LIBERTY DIGITAL, INC., A COPY OF WHICH IS ON FILE WITH THE
COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE MADE
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCK
PURCHASE AGREEMENT. THE HOLDER OF THIS WARRANT AGREES
TO BE BOUND BY ALL OF THE PROVISIONS OF SUCH STOCK
PURCHASE AGREEMENT.
(d) Notwithstanding the provisions of Section 5.5(b), (i) the Company
shall deliver the Warrants or certificates for Warrant Shares without the first
paragraph of the legend set forth in any such clause if the securities referred
to in such clause shall have been registered under the Securities Act or if such
legend is otherwise not required under the Securities Act, and if such legend
has been set forth on any previously delivered certificates, such legend shall
be removed from any certificates at the request of the Holder if the securities
referred to in such clause have been registered under the Securities Act, or if
such legend is not otherwise required under the Securities Act, and (ii) the
Company shall deliver the Warrants or certificates for Warrant Shares without
the second paragraph of the legend set forth in such clause if such legend is no
longer required pursuant to the terms of the Stock Purchase Agreement.
ARTICLE 6.
Loss or Mutilation
------------------
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of a Warrant Certificate and indemnity reasonably satisfactory to it
(it being understood that the written agreement of the Purchaser shall be
sufficient indemnity) and in case of mutilation upon surrender and cancellation
hereof, the Company will execute and deliver in lieu hereof a new Warrant
Certificate of like tenor to such Holder (without expense to the Holder);
provided, in the case of mutilation, no indemnity shall be required if a Warrant
Certificate in identifiable form is surrendered to the Company for cancellation.
<PAGE>
13
ARTICLE 7.
Office of the Company
---------------------
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrant Certificates may be presented for exercise,
registration of transfer, division or combination as provided certificates in
this Agreement.
ARTICLE 8.
Limitation of Liability
-----------------------
No provision hereof, in the absence of affirmative action by the Holder
hereof to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Common Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
ARTICLE 9.
Miscellaneous
-------------
SECTION 9.1 Nonwaiver. No course of dealing or any delay or failure to
---------
exercise any right hereunder on the part of the Holder hereof shall operate as a
waiver of such right or otherwise prejudice such Holder's rights, powers or
remedies.
SECTION 9.2 Unexercised Warrants. Except as otherwise specifically
--------------------
required herein, holders of unexercised Warrants are not entitled (i) to receive
dividends or other distributions, (ii) to receive notice of or vote at any
meeting of the stockholders, (iii) to consent to any action of the stockholders,
(iv) to receive notice of any other proceedings of the Company or (v) to
exercise any other rights as stockholders of the Company.
SECTION 9.3 Amendment. This Agreement, the Warrants and all the Warrant
---------
Certificates may be amended with the written consent of the Company and the
Majority Holders; provided, however, that no such Warrant may be amended to
-------- -------
reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the Exercise Price (before giving effect to any
adjustment as provided therein) without the prior written consent of the Holder
thereof. In determining whether the Holders of the required number of Warrants
have concurred in any direction, waiver or consent, Warrants owned by the
Company or any Subsidiary of the Company shall be disregarded and deemed not to
be outstanding. Also, subject to the foregoing, only Warrants outstanding at the
time shall be considered in any such determination.
<PAGE>
14
SECTION 9.4 Notices. Any notice or communication shall be in writing and
-------
delivered in person or mailed by first-class mail to the addresses set forth in
the Stock Purchase Agreement with respect to the Company and the Holder on the
date hereof and if to any subsequent Holder, at its last known address appearing
on the books of the Company maintained for such purposes.
The Company and any Holder by notice to the other may designate additional
or different addresses for subsequent notices or communications.
SECTION 9.5 Remedies. The Company and the Holder hereof each stipulates
--------
that the remedies at law of each party hereto in the event of any default or
threatened default by the other party in the performance or compliance with any
of the terms of this Agreement are not and will not be adequate and that, to the
fullest extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
SECTION 9.6 Governing Law. The laws of the State of New York shall govern
-------------
this Agreement.
SECTION 9.7 Successors. Subject to Section 5.5 hereof, this Agreement and
----------
the rights evidenced hereby shall inure to the benefit of and be binding upon
the successors and assigns of the Company and the Holder hereof, and shall be
enforceable by any such successors and assigns.
SECTION 9.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
SECTION 9.9 Headings. The headings of the Articles and Sections of this
--------
Agreement have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
SECTION 9.10 Severability. The provisions of this Agreement are severable,
------------
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have executed this
Agreement as of the date first written above.
PRIMEDIA INC.
By:
--------------------------------
Name:
Title:
LIBERTY PRIME, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT 7(E)
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
WITH ANY STATE SECURITIES COMMISSIONER, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT OR LAWS, THE RULES AND
REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN THE STOCK
PURCHASE AGREEMENT DATED AS OF MARCH 29, 2000, AMONG PRIMEDIA
INC, LIBERTY MEDIA CORPORATION AND LIBERTY DIGITAL, INC., A COPY OF
WHICH IS ON FILE WITH THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE MADE EXCEPT
IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCK PURCHASE
AGREEMENT. THE HOLDER OF THIS WARRANT AGREES TO BE BOUND BY
ALL OF THE PROVISIONS OF SUCH STOCK PURCHASE AGREEMENT.
EXERCISABLE UNTIL
12:00 A.M., NEW YORK TIME, on
APRIL 19, 2003
No. of Shares of Common Stock: 1,500,000
WARRANT
To Purchase Common Stock of
PRIMEDIA INC.
This is to certify that LIBERTY PRIME, INC., a Delaware corporation, or
its registered assigns, is entitled at any time prior to the Expiration Date (as
hereinafter defined), to purchase from PRIMEDIA INC., a Delaware corporation
(the "Company"), up to ONE MILLION FIVE HUNDRED THOUSAND (1,500,000) shares of
common stock, par value $0.01 per share, (the "Common Stock") (subject to
adjustment), in whole or in part, at a purchase price of $25.00 per share
(subject to adjustment) (the "Exercise Price"), upon surrender of this Warrant
Certificate, together with the attached Subscription Form duly executed, and
payment of the Exercise Price at the principal office of the Company, but
subject to the terms and conditions set forth herein and in the Warrant
Agreement dated as of April 19, 2000, between the Company and the holder (the
"Warrant Agreement"). Payment of the Exercise Price shall be made, at the option
of Holder, in cash, by a certified or official check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for
such purpose
This Warrant may be exercised at such times and in such amounts as are
provided for in the Warrant Agreement. Each Warrant not exercised prior to 12:00
a.m. on April 19, 2003,
<PAGE>
shall become invalid and all rights hereunder, and all rights in respect
thereof under the Warrant Agreement, shall cease as of that time.
The Warrants evidenced by this Warrant Certificate issued pursuant to the
Warrant Agreement, which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligation, duties and
immunities thereunder of the Company and the Holders of the Warrants. A copy of
the Warrant Agreement may be obtained by the holder(s) hereof upon written
request directed to the Company.
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and the type and/or number of the Company's securities
issuable upon exercise of the Warrants may, subject to certain conditions, be
adjusted.
Upon due presentment for registration of transfer of this Warrant
Certificate at the principal office of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax imposed in connection therewith
which is not payable by the Company pursuant to Section 5.3 of the Warrant
Agreement.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof and of any distribution to the holder(s) hereof and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are not defined herein
and are defined in the Warrant Agreement shall have the meanings assigned to
them in the Warrant Agreement.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: April 19, 2000
PRIMEDIA INC.
By:_______________________________
Name:
Title:
<PAGE>
SUBSCRIPTION FORM
[To be executed only upon exercise of the Warrants.]
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of [up to] ______________ shares of Common Stock
of PRIMEDIA INC., and herewith makes payment therefor, all at the price and on
the terms and conditions specified in this Warrant Certificate and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to _________________________ whose address is
___________________________________ and, if such shares of Common Stock shall
not include all of the shares of Common Stock issuable as provided in this
Warrant Certificate, that a new Warrant Certificate of like tenor and date for
the balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.
- -------------------------------------
(Name of Registered Owner)
- -------------------------------------
(Signature of Registered Owner)
- -------------------------------------
(Street Address)
- -------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the within the Warrant Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
Certificate hereby sells, assigns and transfers unto the Assignee named below
all of the rights of the undersigned under this Warrant Certificate, with
respect to the number of shares of Common Stock set forth below:
No. of Shares of
Name and Address of Assignee of Common Stock
- ---------------------------- -----------------
and does hereby irrevocably constitute and appoint ___________________________
attorney-in-fact to register such transfer on the books of PRIMEDIA INC.
maintained for the purpose, with full power of substitution in the premises.
Dated:_________________________
Name:__________________________
(Print)
Signature:_____________________
Witness:_______________________
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the within the Warrant Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT 7(f)
This REGISTRATION RIGHTS AGREEMENT, dated as of April 19, 2000, is made
and entered into by PRIMEDIA INC., a Delaware corporation (the "Company"), and
LIBERTY PRIME, INC., a Delaware corporation ("Purchaser").
1. Background. Pursuant to a Stock Purchase Agreement, dated as of
March 29, 2000 (the "Stock Purchase Agreement"), among the Company, Liberty
Media Corporation and Liberty Digital, Inc., the Company has sold to Purchaser
an aggregate of 8,000,000 shares of the Company's common stock, par value $0.01
per share (the "Common Stock"), at a purchase price of $25.00 per share, for an
aggregate purchase price of $200,000,000.00 and has issued to Purchaser a
warrant to purchase 1,500,000 shares of Common Stock, subject to anti-dilution
adjustments.
2. Definitions. As used in this Agreement, the following capitalized terms
shall have the following respective meanings:
"Effective Date" - The first anniversary of the Purchase Closing Date (as
such term is defined in the Stock Purchase Agreement).
"Exchange Act" - The Securities Exchange Act of 1934, as amended.
"Holder" - Purchaser, any affiliate of Purchaser and any other person (a
"Third Party Transferee") to whom Purchaser transfers (subject to the terms of
the Stock Purchase Agreement) a number of Registrable Securities equal to at
least 50% of the number of Registrable Securities initially purchased or
received by Purchaser under the Stock Purchase Agreement (as such number may be
adjusted for stock splits, combinations and similar events); provided, that any
such affiliate of Purchaser or Third Party Transferee agrees in writing to be
bound by the provisions of this Agreement; provided, further, that no such Third
Party Transferee shall be permitted to further transfer any rights hereunder.
"Other Holders"- Persons other than Holders who, by virtue of agreements
with the Company, are entitled to include their securities in certain
registrations hereunder.
"Other Securities"- Securities of the Company, other than Registrable
Securities which, by virtue of agreements between Other Holders and the Company,
are entitled to be included in certain registrations hereunder.
"Person" - Any individual, partnership, limited liability company, joint
venture, corporation, trust, unincorporated organization or government or any
department or agency thereof.
"Registrable Securities" - Any Common Stock issued to Purchaser pursuant
to the Stock Purchase Agreement (including the Warrant Shares (as defined in the
Stock Purchase Agreement)) and any Common Stock which may be issued or
distributed in respect of such Common Stock or Warrant Shares by way of stock
dividend or stock split or other distribution, recapitalization or
reclassification. As to any particular Registrable Securities, once issued, such
securities shall cease to be Registrable Securities when (i) a registration
statement with respect to
<PAGE>
2
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (ii) they shall have been distributed to the public
pursuant to Rule 144 under the Securities Act, (iii) they shall be freely
saleable without restriction under Rule 144(k), (iv) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any state securities or blue sky law then in
force, or (v) they shall have ceased to be outstanding.
"Registration Expenses" - Any and all expenses incident to performance of
or compliance with this Agreement, including, without limitation, (i) all SEC
and stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses of complying with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange or with The Nasdaq Stock Market pursuant
to clause (viii) of Section 5, (v) the fees and disbursements of counsel for the
Company and of its independent public accountants, including the expenses of any
special audits and/or "cold comfort" letters required by or incident to such
performance and compliance, (vi) the reasonable fees and disbursements of one
counsel selected by the Holders of a majority of the Registrable Securities
being registered to represent all Holders of the Registrable Securities being
registered in connection with each such registration, and (vii) any fees and
disbursements of underwriters customarily paid by the issuers or sellers of
securities, including liability insurance if the Company so desires or if the
underwriters so require, and the reasonable fees and expenses of any special
experts retained in connection with the requested registration, but excluding
underwriting discounts and commissions and transfer taxes, if any.
"Securities Act" - The Securities Act of 1933, as amended.
"SEC" - The Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act or the Exchange Act.
3. Incidental Registrations.
(a) Right to Include Registrable Securities. If the Company at any time
after the Effective Date proposes to register the offer and sale of Common Stock
under the Securities Act (other than a registration on Form S-4 or S-8, or any
successor or other forms promulgated for similar purposes), whether or not for
sale for its own account, pursuant to a registration statement on which it is
permissible to register the offer and sale of Registrable Securities to the
public under the Securities Act, it will each such time give prompt written
notice to all Holders of Registrable Securities of its intention to do so and of
such Holders' rights under this Section 3. Upon the written request of any such
Holder made within 10 days after the receipt of any such notice (which request
shall specify the number of Registrable Securities intended to be disposed of by
such Holder), the Company will use its commercially reasonable efforts to effect
the registration under the Securities Act of all Registrable Securities which
the Company has been so
<PAGE>
3
requested to register by the Holders thereof; provided, that (i) in the case of
a primary offering of its securities, the Company, at any time after giving
written notice of its intention to register such securities and prior to the
effective date of the registration statement filed in connection with such
registration, shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Securities and each Other Holder of Other Securities requested to be
included in such registration, and, thereupon, shall be relieved of its
obligation to register any Registrable Securities and Other Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses to the Holders in connection therewith), and (ii) if such
registration involves an underwritten offering, all Holders of Registrable
Securities requesting to be included in the Company's registration must sell
their Registrable Securities to the underwriters selected by the Company on the
same terms and conditions as apply to the Company, with such differences,
including any with respect to indemnification and liability insurance, as may be
customary or appropriate in combined primary and secondary offerings. If a
registration requested pursuant to this Section 3 involves an underwritten
public offering, any Holder of Registrable Securities requesting to be included
in such registration may elect, in writing prior to the effective date of the
registration statement filed in connection with such registration, not to
register such securities in connection with such registration. The registrations
provided for in this Section 3 are in addition to, and not in lieu of,
registrations made upon the request of any Holder or Holders in accordance with
Section 4.
(b) Expenses. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 3.
(c) Priority in Incidental Registrations. If a registration pursuant to
this Section 3 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the amount of securities
requested to be included in such registration exceeds the amount which can be
sold in such offering, so as to be likely to have an adverse effect on such
offering as contemplated by the Company (including the price and timing at which
the Company proposes to sell such securities), then the Company will include in
such registration (i) first, 100% of the securities the Company proposes to
sell, (ii) second, any Other Securities requested to be registered by Other
Holders exercising a demand registration right, and (iii) third, to the extent
of the amount of Registrable Securities and Other Securities requested to be
included in such registration which, in the opinion of such managing
underwriter, can be sold without having the adverse effect referred to above,
the amount of Registrable Securities and Other Securities which the Holders and
Other Holders have requested to be included in such registration, such amount to
be allocated pro rata among all requesting Holders and Other Holders on the
basis of the relative number of shares of Registrable Securities and Other
Securities then held by each such Holder and Other Holder (provided, that any
Registrable Securities and Other Securities thereby allocated to any such Holder
or Other Holder that exceed such Holder's or Other Holder's request will be
reallocated among the remaining requesting Holders and Other Holders in like
manner).
<PAGE>
4
4. Registration on Request.
(a) Request by Holders. At any time after the Effective Date, upon the
written request of any Holder or Holders (the "Demand Party") requesting that
the Company effect the registration under the Securities Act of all or part of
such Demand Party's Registrable Securities and specifying the intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all other Holders, and thereupon will, as
expeditiously as possible, use its best efforts to effect the registration under
the Securities Act of:
(i) the Registrable Securities which the Company has been so requested to
register by the Demand Party; and
(ii) all other Registrable Securities which the Company has been requested
to register by any other Holder thereof by written request given to the
Company within 15 days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition of such
Registrable Securities),
all to the extent necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities so to be
registered; provided, that, in no event shall the Company be required to effect
more than two registrations pursuant to this Section 4; and provided, further,
that, the Company shall not be obligated to file a registration statement
relating to any registration request under this Section 4(a) (i) unless the
aggregate requests by the Holder or Holders for such registration cover at least
15% of the number of Registrable Securities held by Holder on the date of this
Agreement (as such number may be adjusted for stock splits, combinations and
similar events), (ii) within a period of nine months after the effective date of
any other registration statement relating to any registration request under this
Section 4(a), or (iii) if with respect thereto, the managing underwriter, the
SEC, the Securities Act or the rules and regulations thereunder, or the form on
which the registration statement is to be filed, would require the conduct of an
audit other than the regular audit conducted by the Company at the end of its
fiscal year, in which case the filing may be delayed until the completion of
such regular audit (unless the Holders of the Registrable Securities to be
registered agree to pay the expenses of the Company in connection with such an
audit other than the regular audit).
(b) Registration Statement Form. The Company shall select the registration
statement form for any registration pursuant to this Section 4; provided, that
if any registration requested pursuant to this Section 4 which is proposed by
the Company to be effected by the filing of a registration statement on Form S-3
(or any successor or similar short-form registration statement) shall be in
connection with an underwritten public offering, and if the managing underwriter
shall advise the Company in writing that, in its opinion, the use of another
form of registration statement is of material importance to the success of such
proposed offering, then such registration shall be effected on such other form.
(c) Expenses. The Company will pay all Registration Expenses in connection
with the registrations of Registrable Securities pursuant to this Section 4.
<PAGE>
5
(d) Effective Registration Statement. A registration requested pursuant to
this Section 4 will not be deemed to have been effected unless it has become
effective; provided, that if, within 180 days after it has become effective, the
offering of Registrable Securities pursuant to such registration is interfered
with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court for an aggregate of more than 20 consecutive
days following effectiveness, such registration will be deemed not to have been
effected. The Holders of Registrable Securities shall be permitted to withdraw
all or part of any Registrable Securities from a registration requested pursuant
to this Section; provided, that if a sufficient number of Registrable Securities
are withdrawn from such registration so that such registration statement does
not cover at least 15% of the number of Registrable Securities held by Holder on
the date of this Agreement (as such number may be adjusted for stock splits,
combinations and similar events), the Company may withdraw such registration
statement. Such withdrawn registration statement shall not count as a requested
registration under Section 4(a) unless such registration statement shall have
been filed with SEC, in which case, such requested registration shall count as a
registration requested pursuant to Section 4(a) (and the number of registrations
permitted to be requested pursuant to Section 4(a) shall be reduced) unless the
Holders agree to pay the Registration Expenses with respect to such
registration.
(e) Selection of Underwriters. If a requested registration pursuant to
this Section 4 involves an underwritten offering, the Holders of a majority of
the Registrable Securities included in such registration shall have the right to
select the investment banker or bankers and managers to administer the offering,
who shall be reasonably acceptable to the Company.
(f) Priority in Requested Registrations. If a requested registration
pursuant to this Section 4 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities) would be likely to have an
adverse effect on the offering as contemplated by the Holders (including on the
price and timing at which the Demand Party proposes to sell such securities (an
"Adverse Effect"), then the Company will include in such registration (i) first,
100% of the Registrable Securities requested to be included in such registration
by the Demand Party and all other Holders of Registrable Securities pursuant to
this Section 4 (to the extent that the managing underwriter believes that all
such Registrable Securities can be sold in such offering without having an
Adverse Effect; provided, that if they cannot, such lesser number of Registrable
Securities as specified by the Demand Party) and (ii) second, to the extent the
managing underwriter believes additional securities can be sold in the offering
without having an Adverse Effect, the amount of Other Securities requested to be
included by Other Holders in such registration, allocated pro rata among all
requesting Other Holders on the basis of the relative amount of all Other
Securities then held by each such Other Holder (provided, that any such amount
thereby allocated to any such Other Holder that exceeds such Other Holder's
request shall be reallocated among the remaining requesting Other Holders in
like manner). In the event that the number of Registrable Securities and Other
Securities requested to be included in such registration is less than the number
which, in the opinion of the managing underwriter, can be sold without having an
Adverse Effect, the Company may include in such registration the
<PAGE>
6
securities the Company proposes to sell up to the number of securities that, in
the opinion of the underwriter, can be sold without having an Adverse Effect.
(g) Postponements in Requested Registrations. Notwithstanding Section
4(f), (i) if the Board determines, in its good faith judgment, that the
registration and offering otherwise required by this Section 4 would have an
adverse effect on a then contemplated public offering of the Company's equity
securities, the Company may postpone the filing of a registration statement
required by this Section 4, during the period starting with the 30th day
immediately preceding the date of the anticipated filing of, and ending on a
date 135 days following the effective date of, the registration statement
relating to such other public offering and (ii) if the Company has pending or in
process a material transaction, the disclosure of which could, in the good faith
judgment of the Board, reasonably be expected to materially and adversely affect
the Company, the Company may postpone the filing (but not the preparation) of a
registration statement required by this Section 4 for up to 90 days; provided,
that, the Company shall at all times in good faith use its commercially
reasonable best efforts to cause any registration statement required by this
Section 4 to be filed as soon as possible. The Company shall promptly give the
Holders requesting registration thereof pursuant to this Section 4 written
notice of any postponement made in accordance with the preceding sentence. If
the Company gives the Holders such a notice, the Holders shall have the right,
within 15 days after receipt thereof, to withdraw their request in which case,
such request will not be counted for purposes of this Section 4.
5. Registration Procedures. If and whenever the Company is required to use
its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the Company
will, as expeditiously as possible:
(i) (x) prepare and, in any event within 60 days after the end of the
period within which a request for registration may be given to the Company,
file with the SEC a registration statement with respect to such Registrable
Securities and (y) use its reasonable best efforts to cause such registration
statement to become effective as promptly as practicable after filing;
provided, however, that the Company may discontinue any registration of its
securities which is being effected pursuant to Section 3 at any time prior to
the effective date of the registration statement relating thereto;
(ii) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for a period not
in excess of 180 days and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement; provided, that before filing a registration statement
or prospectus, or any amendments or supplements thereto, the Company will
furnish to the Holders and to one counsel selected by the Holders of a
majority of the Registrable Securities covered by such registration statement
to represent all Holders of Registrable Securities covered by such
registration statement, copies of all documents proposed to be filed
(including, if requested, all documents to be incorporated by reference in
such
<PAGE>
7
registration statement, prospectus, amendment or supplement), which
documents will be subject to the review of such counsel and the Company
shall not file any registration or amendment or supplement thereto
(excluding any document incorporated by reference in such registration
statement, prospectus, amendment or supplement) if the Holders' counsel
shall reasonably object, in writing, on a timely basis as to a matter
affecting the liability of any Holder or the rights of the Holders under
this Agreement; provided; that any such objecting party and the Company
shall use their good faith efforts to resolve such party's objections on a
basis reasonably satisfactory for such party and the Company which will
permit such filing; provided, further, that nothing in this clause (ii)
shall be construed to require the consent of any Holder or its counsel to
the filing of any document incorporated by reference in any registration
statement, prospectus, amendment or supplement;
(iii) furnish to each seller of such Registrable Securities such number of
copies of such registration statement and of each amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities by such seller;
(iv) use its reasonable best efforts to register or qualify such
Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this clause (iv), it would not be
obligated to be so qualified, to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
(v) use its reasonable best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) notify each seller of any such Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act within the appropriate
period mentioned in clause (ii) of this Section 5, of the Company's becoming
aware that the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such seller, prepare and furnish to such
seller a reasonable number of
<PAGE>
8
copies of an amended or supplemental prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(vii) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations promulgated thereunder;
(viii) use its reasonable best efforts to list such Registrable Securities
on any securities exchange on which the Common Stock is then listed, if such
Registrable Securities are not already so listed and if such listing is then
permitted under the rules of such exchange, and to provide a transfer agent
and registrar for such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;
(ix) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as sellers of a
majority of such Registrable Securities or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;
(x) obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of the
type customarily covered by "cold comfort" letters as the seller or sellers
of a majority of such Registrable Securities shall reasonably request
(provided that Registrable Securities constitute at least 25% of the
securities covered by such registration statement); and
(xi) make available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
seller or any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company with such information
regarding such seller and pertinent to the disclosure requirements relating to
the registration and the distribution of such securities as the Company may from
time to time reasonably request in writing.
<PAGE>
9
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (vi) of this Section 5, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 5, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in clause (ii) of this
Section 5 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vi) of this
Section 5 and including the date when each seller of Registrable Securities
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by clause (vi) of this Section
5.
6. Indemnification.
(a) Indemnification by the Company. In the event of any registration of
any securities of the Company under the Securities Act pursuant to Section 3 or
4, the Company will, and it hereby does, indemnify and hold harmless, to the
extent permitted by law, the seller of any Registrable Securities covered by
such registration statement, each affiliate of such seller and their respective
directors and officers or general and limited partners (and the partners,
members, directors, officers, affiliates and controlling Persons of each of the
foregoing), each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act
(collectively, the "Indemnified Parties"), against any and all losses, claims,
damages or liabilities, joint or several, and expenses to which any such
Indemnified Party may become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Indemnified Party is a party
thereto) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, or (b) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and the
Company will reimburse such Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, liability, action or proceeding; provided, that the
Company shall not be liable to any Indemnified Party in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information with respect to such seller furnished to the Company by such
seller for use in the preparation thereof; and provided, further, that the
Company will not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable
<PAGE>
10
Securities or any other Person, if any, who controls such underwriter within the
meaning of the Securities Act, under the indemnity agreement in this Section
6(a) with respect to any preliminary prospectus or the final prospectus or the
final prospectus as amended or supplemented, as the case may be, to the extent
that any such loss, claim, damage or liability of such underwriter or
controlling Person results from the fact that such underwriter sold Registrable
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus (including any
documents incorporated by reference therein) or of the final prospectus as then
amended or supplemented (including any documents incorporated by reference
therein), whichever is most recent, if the Company has previously furnished
copies thereof to such underwriter. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such seller
or any other Indemnified Party and shall survive the transfer of such securities
by such seller.
(b) Indemnification by the Seller. The Company may require, as a condition
to including any Registrable Securities in any registration statement filed in
accordance with Section 5 herein, that the Company shall have received an
undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 6) the Company and all other prospective sellers or any underwriter, as
the case may be, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary,
final or summary prospectus contained therein, or any amendment or supplement,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information with respect to such
seller or underwriter furnished to the Company by such seller or underwriter for
use in the preparation of such registration statement, preliminary, final or
summary prospectus or amendment or supplement, or a document incorporated by
reference into any of the foregoing. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any of the prospective sellers, or any of their respective affiliates,
directors, officers or controlling Persons and shall survive the transfer of
such securities by such seller.
(c) Contribution. (i) If the indemnification provided for in this Section
6 from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any claim or expenses referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such claim or
expenses in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party from the issuance of the Registrable
Securities and by any such indemnified party from the its sale of Registrable
Securities in the relevant registration statement or, if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in such claim or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates
<PAGE>
11
to information supplied by, such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The amount paid or payable by a party under
this Section 6(c) as a result of the claim and expenses referred to above shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any action or proceeding.
(ii) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in Section 6(c)(i). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(d) Notices of Claims, Etc. Promptly after receipt by an indemnified party
hereunder of written notice of the commencement of any action or proceeding with
respect to which a claim for indemnification may be made pursuant to this
Section 6, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, that the failure of the indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding subdivisions of this Section 6, except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party will be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party will consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof, the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(e) Other Indemnification. Indemnification similar to that specified in
the preceding subdivisions of this Section 6 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.
(f) Non-Exclusivity. The obligations of the parties under this Section 6
shall be in addition to any liability which any party may otherwise have to any
other party.
7. Rule 144. The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted
<PAGE>
12
by the SEC thereunder (or, if the Company is not required to file such reports,
it will, upon the request of any Holder of Registrable Securities, make publicly
available such information), and it will take such further action as any Holder
of Registrable Securities may reasonably request, all to the extent required
from time to time to enable such Holder to sell shares of Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Securities,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements. Notwithstanding anything contained in this
Section 7, the Company may deregister under Section 12 of the Exchange Act if it
then is permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder.
8. Miscellaneous.
(a) Holdback Agreement. If any registration of Registrable Securities
hereunder shall be in connection with an underwritten public offering, each
Holder of Registrable Securities covered thereby agrees not to effect any public
sale or distribution, including any sale pursuant to Rule 144 under the
Securities Act, of any equity securities of the Company, or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (in each case, other than as part of such underwritten public offering),
within 7 days before or 90 days (or such lesser period as the managing
underwriters may permit) after the effective date of such registration, and the
Company hereby also so agrees.
(b) Amendments and Waivers. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding. Each Holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 8(c), whether or not such Registrable
Securities shall have been marked to indicate such consent.
(c) Successors, Assigns and Transferees. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent Holder of any Registrable Securities, subject
to the provisions contained herein.
<PAGE>
13
(d) Notices. All notices and other communications provided for hereunder
shall be in writing and shall be sent by first class mail, telex, telecopier or
hand delivery:
(i) if to the Company, to:
PRIMEDIA Inc.
745 Fifth Avenue
23rd Floor
New York, NY 10151
Fax: (212) 745-0199
Attention: Beverly C. Chell, Esq.
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Fax: (212) 455-2502
Attention: Marni J. Lerner, Esq.
(ii) if to Purchaser, to:
Liberty Prime, Inc.
9197 South Peoria Street
Engelwood, Colorado 80112
Fax: (720) 875-5382
Attention: Charles Tanabe, Esq.
With a copy to:
Baker Botts LLP
599 Lexington Avenue
New York, NY 10012
Fax: (212)-705-5125
Attention: Robert W. Murray Jr., Esq.
(iii) if to any other holder of Registrable Securities, to
the address of such other holder as shown in the
books and records of the Company, or to such other
address as any of the above shall have designated in
writing to all of the other above.
All such notices and communications shall be deemed to have been given or made
(1) when delivered by hand, (2) five business days after being deposited in the
mail, postage prepaid, (3)
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14
when telexed, answer-back received or (4) when telecopied, receipt acknowledged.
(e) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(f) Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
(h) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed therein. The parties to this Agreement hereby
agree to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this Agreement.
(i) Specific Performance. The parties hereto acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, it is agreed that they shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or equity.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Agreement to be executed on its behalf as of the date first written
above.
PRIMEDIA INC.
By:____________________________________
Name:
Title:
LIBERTY PRIME, INC.
By:____________________________________
Name:
Title:
